The UK is making it easier to get credit
The government has announced a series of reforms aimed at significantly expanding access to affordable credit and savings through credit unions, potentially benefiting millions of households across the UK.
The changes, which deliver on a Labour manifesto pledge to grow the mutuals sector, focus on modernising the ‘common bond’ rules that have historically limited who can join credit unions.
These member-owned, not-for-profit financial cooperatives offer lower-cost loans and secure savings as an alternative to high-interest payday lenders and other expensive credit options.
Under the new rules:
- The cap on potential members for locality-based credit unions (those tied to a geographic area) will increase from 3 million to 10 million, allowing larger unions to scale up and serve broader communities.
- Students living or working in an eligible area can now join locality-based credit unions.
- Credit unions can extend membership to more relatives and household members.
- Existing members can retain full membership rights even after retirement.
These adjustments remove long-standing barriers that have restricted growth in the sector, making it easier for families, workers, students, and retirees to access fairer financial products.
Credit unions typically provide loans at much lower interest rates than high-cost lenders, helping people avoid debt traps and build financial resilience amid ongoing cost-of-living pressures.
“These reforms will help more people get access to affordable credit and a safe place to save, so families have a real alternative to high-cost credit,” said Economic Secretary to the Treasury Lucy Rigby.
“We’re delivering on our manifesto pledge to grow the mutual sector by backing credit unions to expand and serve more communities. It’s another step in making financial services more accessible and supporting people to build financial resilience.”
The announcement follows a Call for Evidence on common bond rules, launched after the Chancellor’s Mansion House speech, and aligns with the government’s broader Financial Inclusion Strategy.
That strategy includes initiatives like a £30 million Credit Union Transformation Fund to help unions modernise technology, collaborate regionally, and scale sustainably.
