Credit unions run into a snag because of registrar's ruling

The development of credit unions has been held back by the inflexibility and inconsistency of the Registrar of Friendly Societies, according to a study about to be published by the Joseph Rowntree Foundation, writes Paul Gosling.

Potential credit unions have been rejected by the registrar because proposed definitions for the 'common bond', the basis of a credit union, have been deemed unacceptable, the researchers from Sheffield and Liverpool universities say. In some instances unions have been forced to use common bonds that are more remote and less effective.

The registrar had decided that two neighbouring housing estates in Sheffield did not form a community of interest, but the whole of Dunfermline did. The registrar was also criticised for refusing to accept that there could be a common interest between people living in an area and those working in it. A spokesman for the registrar said that he had not yet seen a copy of the report and could not comment.

The study looked into the slow development of community-based credit unions, which have been overshadowed by unions formed within workplaces. Credit unions, which provide loans at low interest rates, have been promoted as an alternative to loan sharks for people on low incomes or unemployed.