The reason Credit Unions arose at all is because the needs of the people were not being met. People were unable to get financial without going to the greedy moneylenders, and the poorest couldn't pay the enormous interest rates being sought.

The first Credit Union began in 1840 when German farmers were in financial trouble due to poor crop harvest and famine. The credit union had three main principles: community mentality, co-operative interdependence, and a volunteer management structure.

A succession of small credit union societies was established at various places within Germany for the purpose of getting poor people to pool together their limited financial resources. Through this a common fund was formed which allowed small loans to be granted for the alleviation of debt, and as an affordable alternative to other expensive sources of borrowing.

Ever since the early 19th century, Credit Unions have risen up in many countries throughout the world, including much of Europe, Ireland, and more lately Britain, and across the Atlantic to Canada and the US.

As far as Britain was concerned, the early 1960s saw the start of the British credit union movement with the arrival of Caribbean and Irish immigrants. This proved so successful that by 1977 there were 40 credit unions in Britain.
The success of the Credit Union brought about the 1979 Credit Unions Act in Britain, which regulated the size of the loans and shareholding, the rate of interest and the rate of dividend. An organisation could now no longer call themselves a credit union without being registered. In July 2002 credit unions came under the regulation of the Financial Services Authority (FSA).

In August 2002 there were around 700 credit unions in Britain with over 220m in assets and 300,000 members (FSA figures).

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