Public Policy Towards Credit Union Development in Britain

Abstract

Credit Unions are mutually owned financial services co-operatives, that provide savings and low interest loans services to their members. Their numbers have grown significantly in Britain, since the late 1980s. Evidence from other countries demonstrates that there is scope for the further expansion of the number of credit unions and the services they provide. The underlying contention of this thesis is that the relative weakness of the British credit union sector, is due to the lack of a coherent and widely agreed strategy for the progressive development of credit unions. This lack of clarity and cohesion in the objectives of stakeholders and their related actions, are examined through a two stage research process. There are various policy rationales for supporting the development of credit union. These include: anti-poverty and counter exclusion objectives; and community and economic development. The problem of many and conflicting policy objectives can be determined from the factors motivating the range of stakeholders in the credit union sector and their degrees of commitment to credit union development. The research identifies a core policy community and within it, those organisations that make the most significant contributions to credit union policy-making and the supply of support services and activities. This thesis concludes that there is a need for a strategy that is geared to promoting growth among credit unions. This should include the effective lobbying of central government to relax the current legislative constraints. There is also a need for the creation of sustainable local infrastructure to support credit union development where it actually takes place, at the local level. The commitment of public policy towards credit union development in these respects, is the key to changing credit unions into a mainstream financial service provider and enhancing their contributions to the wider public policy agenda.