Credit union reforms welcomed

A BILL bringing credit unions into alignment with other financial service providers has been read for the first time in Parliament and welcomed by Coop Money NZ members.

Credit Union South, which is based in Dunedin and covers the whole South Island, is part of Coop Money.

Coop Money chairwoman Claire Matthews said yesterday New Zealand was the only jurisdiction where credit unions did not have their own legal form.

‘‘The changes the Bill proposes for credit unions are similar to the approaches of credit unions around the world and the World Council of Credit Union’s model law.

‘‘We want to bring New Zealand into line with other countries and have an Act that becomes fit for purpose again.’’

The Friendly Societies and Credit Unions (regulatory improvements) Amendment Bill was introduced by Kaikoura MP Stuart Smith.

Dr Matthews said the Bill, the contents of which had been worked on for the last four years, called for essential changes to the Friendly Societies and Credit Unions Act 1982.

It included removing unnecessary operating and compliance costs, promoting greater efficiency, innovation and accountability and maintaining the mutuality and common bond between members.

If passed, the Bill would allow credit unions to provide financing to small and mediumsized enterprises that were owned or closely associated with a member of the credit unions.

It would simplify the statutory objectives of an association of credit unions in respect of its activities and reduce to two the minimum numbers of members required to form an association of credit unions.

The existing legislation was 35 years old and had not kept up with rapid changes in the financial services and payments industry, Dr Matthews said.

‘‘This is a welloverdue opportunity to update the legislation.’’

When the legislation was first enacted, the world of financial services was completely different. The first ATMs were just being introduced to New Zealand and there was no internet or mobile banking which is commonplace now, she said.

Thirteen credit unions operated in New Zealand and had 190,000 members between them.