ABCUL’s 2023 Conference: Looking Towards New Products and Regulation

“For some credit unions it represents a significant shift, with the cost of living crisis leaving a quarter of UK citizens with low levels of financial resilience, the FCA expects credit unions to give “appropriate levels of care” to members – as well as investing in tech to offer new services".

The UK credit union movement gathered in Manchester this month at a pivotal moment, with policymakers, looking for financially sustainable routes out of the cost of living crisis, planning new regulations and encouraging the sector to offer new products.

This comes alongside existing pressures on the movement, with Mike Mercer – a stalwart of the credit union sector in the US state of Georgia – warning in his opening plenary address that credit unions are “falling behind”, dwindling in number through a process of consolidation and struggling to keep up with advancing technology.

Mercer, who now runs COOPR8 Consulting, warned of the risk of drifting too far towards a non-profit ethos and “giving too much away”: credit unions need to take care of the business as well as the members, he said – a tension that was addressed at various points of the conference as speakers assessed the role of credit unions in a struggling economy.

In the second plenary address, Martha Stokes from the Financial Conduct Authority (FCA) said credit unions have three priorities – to avoid harm, improve standards and diversify services. “We want members to have accessible and affordable products that meet their needs,” she said, introducing the new Consumer Duty being put in place by the FCA to improve customer protection, which “will fundamentally change financial services industry”.

To meet these demands, credit unions will need strong governance, with clear roles and responsibilities set for senior managers and effective risk management needed.

She also stressed the need for good record keeping, investment in emergency resilience in terms of IT systems, cybersecurity and oversight of third party providers.

“For some credit unions it represents a significant shift,” she warned. With the cost of living crisis leaving a quarter of UK citizens with low levels of financial resilience, the FCA expects credit unions to give “appropriate levels of care” to members – as well as investing in tech to offer new services.

Government changes, flagged up at previous ABCUL conferences. will allow credit unions to offer new products such as car finance and insurance.  Stokes noted that credit unions will need to apply to the FCA for permission to deliver new services, show how these activities meet the Consumer Duty and how the credit union can monitor these new products.

“There’s a need for more sustainable community-based finance,” she said, “and credit unions need to adapt to meet those needs.”

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