The Institutional Transformation of British Credit Unions

Credit Unions in the UK had their custody transferred in 2002 from the Registry of Friendly Societies under the Financial Services Authority. This paper examines the reasons why such a move may eventually lead to the mutation of the British Credit Union movement from small co-operative financial organisations to medium-sized banks (the bankalisation process) in order to cover the de-mutualisation gap that was left in the financial market in the 1980s when most of the Building Societies became Public Limited Companies (PLCs). The first part of the paper seeks to contextualise the Credit Union movement. The second part will address the government support that British Credit Unions receive both verbally as well as financially. The third part will define the term ‘bankalisation’ and will address the issues behind such a phenomenon. The final part will conclude with a brief discussion of the issues.