AUCKLAND, 8th June 2017: Co-op Money NZ is delighted the Friendly Societies and Credit Unions (Regulatory Improvements) Amendment Bill, which will update the law for credit unions and their association, has been read for the first time in Parliament.
MP for Kaikoura, Stuart Smith introduced the Member’s Bill yesterday. The Bill was supported across the House by all parties who spoke and was given its first reading unopposed. The Bill, including issues raised by credit unions, will now be considered by the Finance and Expenditure Select Committee.
The Bill, the contents of which has been worked on by MBIE and the credit union sector for the last four years, calls for essential changes to the Friendly Societies and Credit Unions Act 1982, including:
- Bringing credit unions into alignment with other financial service providers
- Removing unnecessary operating and compliance costs
- Promoting greater efficiency, innovation and accountability
- Maintaining the mutuality and common bond between members.
The Bill includes provisions for:
- credit unions and associations of credit unions to become bodies corporate under the Friendly Societies and Credit Unions Act with the powers of natural person;
- credit unions to provide financing to SME’s that are owned by or closely associated with a member of the credit unions;
- simplifying the statutory objects of an association of credit unions in respect of its activities; and
- reducing to two the minimum numbers of members required to form an association of credit unions.
Chair of Co-op Money NZ, Dr Claire Matthews, says New Zealand is currently the only jurisdiction where credit unions don’t 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’ once again.
“The existing legislation is 35 years old and has not kept up with rapid changes in the financial services and payments industry. This is a well-overdue opportunity to update the legislation. When the legislation was first enacted in 1982 the world of financial services was completely different to now – the first ATMs were just being introduced to NZ, and there was no internet or mobile banking which is commonplace nowadays. It’s no longer fit for purpose.”
Henry Lynch, Chief Executive of Co-op Money NZ says changes to the legislation will make it easier for credit unions to deliver flexible solutions that benefit their members.
“Credit unions are important to our country’s financial system offering customers innovative and progressive products and services. As many as 1 in 20 New Zealanders, from a diverse range of communities and organisations, belong to a credit union or mutual building society and we want them to have access to the best banking and financial services possible.”
Thirteen credit unions operate in New Zealand with 190,000 members. Credit unions offer modern banking services and Co-op Money NZ operates New Zealand’s largest ATM payment switch with 900 machines.
The Bill is intended to be regulatory and taxation neutral and under the Bill credit unions and their boards would remain subject to the existing legal and regulatory requirements under the Reserve Bank of New Zealand, financial markets, financial reporting and taxation legislation.