What are Credit Unions & Building Societies?

Credit unions and mutual building societies are Authorised Deposit-taking Institutions (ADIs) and are subject to the strongest regulatory framework in the financial sector.

Each credit union and building society will set its own pricing to best meet the needs of its members. Credit unions and building societies offer a wide range of retail banking services, like savings products, home loans, personal loans and credit and debit cards.

Credit unions and building societies in the community 

Australia has one of the largest and most successful member-owned finance systems in the world. Credit unions, mutual building societies are member-focused, values-driven organisations that undertake a range of community engagement activities, to help disadvantaged individuals and give back to their local communities.

There are many examples of credit unions and mutual building societies working to build sustainable communities through partnership programs.  These programs demonstrate community engagement through support for initiatives and other local community organisations.  These range from No Interest Loan Schemes (NILS) and low interest loan programs to targeted support, accounts and partnerships with non-government organisations working within communities to achieve sustainable aims.

Some examples of community-support partnership programs:

• Special grants programs to help disadvantaged families;
• An indigenous credit union employing primarily local Indigenous staff and operates in 12 remote communities throughout the Northern Territory; 
• Low interest and no interest loan programs;
• Environmental programs such as land banks, and environmental loan programs;
• A range of community based sponsorship programs. 

How are we regulated?

ADIs are subject to close supervision by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959. All ADIs – banks, building societies and credit unions are subject to the same, strict, legally-enforceable prudential standards on capital, liquidity, risk management and governance.  Deposits in ADIs of up to $250,000 are guaranteed by the Federal Government on a permanent basis from 1 February 2012.

In addition to their licence to carry out banking business, all credit unions and mutual building societies hold an Australian Financial Services Licence (AFSL) and are regulated by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. AFSL holders are subject to a range of licensing, conduct and disclosure obligations.

Credit unions and mutual building societies are also subject to regulatory obligations under a range of laws, including:

• consumer credit laws;
• the Privacy Act 1988;
• the Anti-Money Laundering and Counter-Terrorism Financing Act 2006;
• payments system regulation;
• the Electronic Funds Transfer Code of Conduct; and
• the Mutual Banking Code of Practice.