“The major problem CUs have in the UK is that there is currently a very low rate of participation. In other countries, for example Ireland, 50 per cent of the adult population are members of CUs. Even in the US the figure is 30 per cent. Here in the UK we have a very low level of participation and for most people they are not a savings or borrowing option they have ever heard of let alone considered.
“This legislation change will only see greater participation if the CUs are able to spread their message which itself cost money. The finance market has in reality a very high cost of entry as the existing player (in main the High Street banks) spend so much on advertising that any CU would have to have significant reserves if it was going to get its voice heard above the existing chatter of high street brands.
“If it is to be a revolution in banking it is likely to be a quiet one, spread by word of mouth. In that regard the consumer can spark a surge in product interest (be that financial or otherwise) through the internet. This probably represents the CUs best chance of spreading their message. In reality that message will only spread if it is a good one. That in terms of finance means the CUs offering higher than market interest rates to savers and lower than market interest rates on loans.
“The change in the legislation on its own will not allow the CUs to offer such options and in reality they may still be left to trade on their current selling premises of "not as good in terms of rates but ethically more acceptable that the high street brands". We see such a line from the COOP and Charity bank but neither have been able to make much of a dent in the market due to the need for them to price products to reflect the additional costs associated with an ethical stance.”