Kaikōura MP Stuart Smith’s proposed bill to modernise legislation surrounding the credit union sector has passed its first reading in Parliament.
Mr Smith’s Friendly Societies and Credit Unions (Regulatory Improvements) Amendments Bill seeks to remove unnecessary operating and compliance costs, promote greater efficiency, innovation and accountability and bring credit unions into alignment with other financial service providers.
The bill would make changes to the Friendly Societies and Credit Unions Act 1982, which was enacted well before modern banking options, including mobile and internet banking, became available.
“Credit unions play a vital part in our country’s financial system. They have become highly progressive in their development of innovative payment methods, despite operating within the confines of legislation that has not kept pace with modern developments within the sector,” Mr Smith says.
He says the Bill is not only an important opportunity for an update of legislation surrounding the credit union sector - which covers 13 credit unions and their 190,000 members - but also for the customer-owned banking sector of New Zealand.
“Most importantly, it will help ordinary New Zealanders who borrow from credit unions, especially those starting out.”
The Bill provides for a statutory transition process for credit unions from being unincorporated associations to bodies corporate, in order to minimise compliance and transactional issues and costs, Mr Smith says.
“Under the current Act, credit unions have a very complex supervisory and oversight regime. This inhibits the efficiency and effectiveness of the unions, adds unnecessary operating and compliance costs, and results in confusion for union members and for the public.
“In streamlining these complex regulations, the Government is supporting our financial institutions to succeed.”
The Bill will now be considered by the Finance and Expenditure Committee.