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Credit Union

General Characteristics

A form of co‑operative which provides financial services to its members, who will be individuals who share a "common bond", i.e. residing in the same locality; sharing an association with a particular organisation; working for a common employer; or following a particular occupation.

Credit unions pay modest interest on their members' savings, and charge low interest on loans to members. Members must have been saving for a minimum period before they are entitled to borrow.

Credit unions are mostly run by unpaid volunteers who are also members.

Ownership: a credit union is owned by its members, being savers and borrowers.

Charitable status: a credit union will not be eligible for charitable status.

Legal Forms Used

Credit unions are governed by their own legislation and are required to adopt a specific legal form under industrial and provident society legislation. They are regulated by the Financial Services Authority.

Profit Distribution

No profit distribution is permitted other than interest paid on savings.

Participation Issues

Participation is generally restricted to members, though larger credit unions may operate social programmes that involve other members of the community.

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