Proposed changes to the Friendly Societies and Credit Unions Act welcomed by Co-op Money NZ

MBIE’s exposure draft of the Regulatory Systems Amendments Bill includes proposed changes to the Friendly Societies and Credit Unions Act, which will bring significant benefits to NZ-owned credit unions and their members.

AUCKLAND, 21 DECEMBER 2015: Co-op Money NZ, the association representing and assisting co-operatively owned credit unions and mutual building societies in New Zealand, welcomes the issue of the draft Regulatory Systems Amendments Bill by the Ministry of Business, Innovation and Employment (MBIE).

The exposure draft of the omnibus Regulatory Systems Amendments Bill 2015, which has been released prior to its introduction in Parliament early next year, includes proposed amendments to the Friendly Societies and Credit Unions Act (1982), which will bring significant benefits to NZ-owned credit unions and their members.

“The Friendly Societies and Credit Unions Act of 1982 (FSCU Act) is an old and inefficient piece of legislation for the modern business environment that credit unions operate in. Under the current Act, credit unions have a very complex supervisory and oversight regime that adds unnecessary business costs and confusion for both our Member organisations and the public. With the amendments in place, credit unions and associations will become incorporated entities with updated powers and this will bring them into alignment with other financial services providers in New Zealand.” said Henry Lynch, CEO of Co-op Money NZ.

The proposed changes to the FSCU Act will have credit unions established as bodies corporate, which will remove the requirement to have internal trustees, and will improve accountability, while reducing compliance costs. Proposed amendments will also allow credit unions to start financing member-owned SMEs, which will enable them to help more New Zealanders and their local communities

“These changes to the FSCU Act will bring New Zealand in line with other countries, and reduce compliance costs, while at the same time continuing the element of mutuality and the requirement of a common bond between members, which are the hallmarks of credit unions. As mutual organisations, these savings will ultimately be passed back to the mum and dad Kiwi households that bank with credit unions.”

“Likewise, improving the efficiency by which credit unions may lend to their members’ businesses will assist credit union growth and also provide welcome funding for businesses in the local communities that these credit unions serve. SMEs make up more than 95% of all businesses in the country, and the ability to efficiently fund these firms will enable community funds to be used for local enterprises that will enrich the country’s economy,” said Lynch.

“On behalf of its Member organisations, Co-op Money NZ has been championing these changes to the FSCU Act for a long time. We have had considerable dialogue with the Reserve Bank of New Zealand, Financial Markets Authority, MBIE, Ministers and MPs over a number of years on these particular issues. We are appreciative of the work of the Government and officials, and the cross-party support from all political parties, for this long overdue reform. We are absolutely thrilled to see that MBIE’s draft of the Regulatory Systems Amendments Bill addresses the changes that we have been advocating,” added Lynch.

Credit unions and mutual building societies have long been a crucial part of the New Zealand economy.

“Unlike overseas financial institutions that operate in the country, profits made by credit unions and mutual building societies are returned back to New Zealand communities in various ways. This way we ensure that the funds we create stay in and enrich the people of New Zealand,” concluded Lynch.

ENDS.

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