Democrat - September 2006 (Number 97)
Credit Unions under EU threat
Credit unions, which help working people build up a pool of savings and loans, are under threat from new EU rules which would slap an annual bill of over £50,000 on all businesses involved in 'money transmission'.
Credit unions, which are voluntary and often very small, would each have to find £50,000 a year to retain a new pan-European licence for companies involved in 'payments systems' under a plan that the UK cannot block.
This cost, along with a £50,000 ' joining fee' and the burden of complying with a new regulatory regime, would add hugely to the unions' operating overheads.
Credit union membership has trebled since 1995 to around half a million people and the amount of money saved shot up by 600 per cent to £380 million. The volume of loans increased by a similar percentage to £353 million so they are increasingly unpopular among the large corporate banking sector.
Up to 2,000 small firms could also be priced out of the money-transfer business under the same European Commission plans. This would hurt migrant workers sending remittances back to their home countries through small-scale money-transmission operators.
Britain opposes proposal
Chancellor Gordon Brown wants to stop the EU catching credit unions in its regulatory net and the Treasury has announced that 'The UK is seeking an exemption for credit unions' .
However, because the entire directive, which is expected to be debated among member states before the end of this year, is subjected to majority voting, neither Britain nor any other country can succeed in blocking it on its own.
The Treasury's consultation paper effectively admits that rejecting the EU proposal is not an option. It states: 'The power to propose legislation in this area lies with the European Commission. The UK has been an important voice in these negotiations, but it is one member state out of 25 in an area where qualified majority voting applies'.