Credit unions in the United Kingdom

Credit unions in the United Kingdom were first established in the 1960s. Credit unions are member-owned financial cooperatives operated for the purpose of promoting thrift, providing credit and other financial services to their members.

Credit unions in the UK now offer a wide range of services to their members; including current accounts, payroll deductions, standing orders and insurance.

Co-operative or mutual organisations engaging in cooperative banking, such as building societies, have existed in the UK since the 18th century.

Institutions known as mutual societies grew out of the friendly society movement of the 18th century, with the first mutual insurer, Equitable Life, being founded in 1762. Formalised under the Friendly Societies Act 1819, mutual institutions predated the welfare state and were formed to meet the needs of a growing urban working class. This communitarian self-help movement allowed small regular individual contributions to be pooled for mutual collective benefit, obtaining the same economies of scope and scale necessary for providing insurance and financial products. Mutual societies helped to raise funds for housing and consumer durables at a time when commercial banks were still exclusively commercial lenders.Building societies were formed as small temporary societies by worker co-operatives, pooling resources to build local houses and subsequently allocating them among members by drawing lots. Once all members were housed, these organisations were typically wound up, although some became permanent societies in an effort to promote wider home ownership, as exemplified by the Leeds Permanent Building Society.

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