New freedom for credit unions
Credit unions are "delighted" by incoming law changes that will reduce their costs, increase flexibility, and help them compete with the big banks.
The member-owned credit unions and building societies have spent years campaigning for a raft of changes to make it easier to do business.
Commerce Minister Craig Foss announced the long-awaited changes were on the way, with updates to the Friendly Societies and Credit Unions Act 1982 in train.
"Credit unions play a valuable role in our communities and financial sector," Foss said.
"This legislation will contain a number of amendments to give credit unions legal status and reduce unnecessary operating and compliance costs."
The main change gives credit unions legal status as bodies corporate, meaning they can have limited liability, own property, have perpetual succession and sue and be sued in their own name.
They will also be able to lend to small and medium-sized businesses, avoiding the clumsy current workaround which involves lending to a member, who then on-lends to the business.
Henry Lynch, chief executive of the industry group New Zealand Association of Credit Unions (NZACU), said he was delighted with Foss' announcement.
"The change will not only simplify things for everyone, it will open up a lot more opportunity for both credit unions and small business owners to encourage investment in local economic growth," Lynch said.
Credit unions and building societies have a long history in New Zealand, with more than 200,000 members between them.
Regulatory and compliance burdens are often cited as the main reasons they have been unable to challenge mainstream lenders on a larger scale.