Three credit unions have been given five-star quality certifications from the Fairbanking Foundation for their personal loan products.
The not-for-profit charity, which was set up to encouraging banking institutions to improve the financial well-being of their customers, awarded the Mark certifications to Central Liverpool Credit Union, London Capital Credit Union and the Enterprise Credit Union.
The move was praised by the Archbishop of Canterbury, Dr Justin Welby, who is a patron of The Fairbanking Foundation.
He said: “These awards represent an enormous vote of confidence in these credit unions, showing the service they provide is excellent as well as fair.
“I hope and pray that these awards will inspire more people to join credit unions, which have a very important role to play in making banking more transparent and fair, and in setting an example to the rest of the sector.”
This comes as the Prudential Regulation Authority and the FCA proposed changes to their rules regarding credit unions.
A 73-page consultation published by the two regulators, Reform of the Legacy Credit Unions Sourcebook, outlined a variety of proposed changes, made separately by each regulator, to the rules.
Under one PRA proposal forming part of a consultation, which closes on 30 September, credit unions would only be able to enter into mortgages subject to a regulated mortgage contract, as defined in the current PRA glossary.
Credit unions would only be allowed to invest in capital-protected products, with the intention of holding these to maturity, under another PRA proposal.
The PRA deals with matters affecting the financial safety and soundness of credit unions, while the FCA focuses on how credit unions conduct business.
According to the Association of British Credit Unions, as of 31 December 2014 there were approximately 362 credit unions across England, Scotland and Wales, employing more than 1,500 staff.
According to the figures, the sector was used by 1,197,293 people and had total assets of £1.26bn.
In 2013 the Archbishop of Canterbury Justin Welby put credit unions in the spotlight by claiming he would back them as a competitor to payday lenders such as Wonga.
Since then, the Church of England has been involved in measures to promote credit unions.
The archbishop’s task group on responsible credit and savings, set up in January 2015 and chaired by former FSA chief executive Sir Hector Sants, has developed initiatives that are already being piloted, such as LifeSavers, a national savings club programme for primary schools and the training of ‘church credit champions’ to increase the awareness and membership of credit unions.
|Credit union sector as of 31 December 2014|
|Approximately 362 credit unions across England, Scotland and Wales|
|Total assets of £1.26bn|
|Total loans of £718m|
|Total deposits of £1.07bn|
|22 credit unions across the UK offering current accounts|
Source: Association of British Credit Unions
Simon Mansell, director of Worcester-based Temple Bar, said: “Credit unions usually lack resources, so financial stability is an area where regulators need to be careful in their attempts to encourage them while not giving them the regulatory kiss of death.”