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History of Credit Unions
Savings and credit societies have been in existence in New Zealand for over 120 years. A number of small independent credit unions were also established from the turn of the century, but their size and influence was limited.
In the 1950s, Father Marion Ganey, who had been active in promoting credit unions in the South Pacific, met with Tom Mitchell, a Catholic layman of Hamilton and Father H. Boyd of Matata. Both were so impressed with his ideas that as a result two sister parish credit unions were established: St Joseph's (Matata) Credit Union in the Bay of Plenty, and St Mary's Parish Credit Union in Hamilton.
In 1959 Colin Smith, a Hamilton chartered accountant, was elected treasurer-manager of St Mary's Parish Credit Union. In 1961, Father Ganey was brought to this country for a seminar where he talked about the importance of a united credit union movement. Colin Smith set about organising the New Zealand Credit Union League that formally changed its name to New Zealand Association of Credit Unions (NZACU) in 1989. Trevor Barber was the League’s first President and Colin Smith the first secretary.
In 1964 the League had nine Member credit unions. Colin Smith held the position of Managing Director until his death in 1986. He travelled around New Zealand, promoting parish and industrial-employee credit unions. He also travelled overseas in order to learn more about credit unions in other countries, and in 1967 set up direct links with CUNA International (now known as the World Council of Credit Unions).
By the early 1980s New Zealand had several hundred credit unions. As the movement matured, the smaller of these began to amalgamate by merger or transfer of engagements, a process that is ongoing today. However, despite its continued growth and development, the movement remains true to its operating principles of democracy and cooperation and its motto of “People Helping People”.
Membership in a credit union has always been open to all New Zealanders and since December 2006, Charities and Incorporated Societies have also been able to become members due to a legislative amendment. Credit unions operate within an accepted ‘common bond of association’ or ‘membership rules’, which can include combinations of occupations, localities, employers or organisations.
Another legislative change occurred in 2000 which required credit unions to operate within a Trust Deed regime, a requirement of the Securities Act 1978. This change meant that credit unions are now required to be monitored by an independent prudential supervisor and their members’ deposits are secured by a first ranking registered Trust Deed, providing financial comfort to their members. In 2008 the Reserve Bank of New Zealand Amendment Act 2008 required all non-bank deposit takers, which includes credit unions, to be regulated by the Reserve Bank of New Zealand.
Credit Union History
From their early origins, credit unions were unique savings institutions created not for profit, but to serve members as credit cooperatives. The earliest of these date back to 19th-century England. However it was in mid-1800s Germany that we find the forbears of the credit unions, as we know them today, being:
- democratically governed
- granting each member one vote
- steered by member-elected directors
- and volunteer-based.
These early credit unions were created in 1846 when crop failure and famine struck Germany. Herman Schulze-Delitzsch organised a co-operatively owned mill and bakery which sold bread to its members at substantial savings, and a "people’s bank" that provided credit to farmers.
Friedich Raiffeisen formed the Heddesdorf Credit Union for German farmers in 1864, and the first credit union central bank in 1876. The credit union idea spread quickly through Europe.
It crossed the Atlantic in 1900. Alphonse Desjardins, a Quebec court reporter, recognised problems caused by loan sharks and organised La Caisse Populaire de Levis, a credit union for the working class. In 1908, Alphonse Desjardins helped a group of Franco-American Catholics organise St. Mary’s Cooperative Credit Association, the first credit union in the United States.
The US credit union movement became increasingly popular in the 1920s economy. Edward Filene, a wealthy Bostonian, dedicated himself to developing the movement. In 1921 he financed the credit union National Extension Bureau and hired a lawyer named Roy F. Bergengren to run it. Bergengren travelled thousands of miles to promote the cause. In 1935 President Roosevelt signed a government charter for credit unions into federal law.
Edward Filene and Roy F. Bergengren began providing assistance for credit unions outside the United States. With their help, the movement spread to Nova Scotia, Canada, the Philippines and, in the 1940s, Jamaica and Belize.
A Jesuit priest, Father Marion Ganey introduced credit unions into Fiji in the 1950s. He saw credit unions as a method by which poor people could organise their own affairs, by the promotion of thrift and provision for low-cost finance to their mutual advantage.
In 1954 the World Extension Department was created to give international direct assistance with credit unions, often in collaboration with government programmes. The World Council of Credit Unions was created in 1971 and it now has members and affiliates in 97 countries who serve more than 172 million credit union members.