Credit Unions Need Protection Against People's Bank

The People's Bank is running into trouble as its backers back away from it, National's Finance spokesman Bill English said today.

Mr English has today announced a private members bill to help credit unions compete against the People's Bank.

"National supports the credit unions because we do not want to see these self-help organisations rubbed out by a taxpayer subsidised bank.

"A New Zealand Post business plan leaked earlier this year showed the People's Bank intends to target credit union customers. Right now credit unions have to fight with both hands tied behind their backs. My bill makes administrative changes which will enable them to compete on a better footing, to protect the interests of their 250,000 members.

"The credit unions will take some heart in the fact the People's Bank has lost one of its major early backers. Westpac was going to provide the administrative backup the People's Bank will need. But Westpac and the People's Bank have been unable to agree on terms, and the deal is now off.

"We are advised that the People's Bank now intends to develop those services itself. This will add substantially to the costs and risks of setting up the Bank. It also means the business plan will be significantly different from the plan approved by the Government.

"This is all good news for credit unions and other competitors such as the PSIS, the Taranaki Savings Bank and the Southland Building Society. The People's Bank can only succeed if it takes the better-paying customers off the credit unions. The bill I have announced today gives the credit unions a chance," Mr English said.

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