Government is amending the Credit Union legislation to bring it in line with current financial regulations.

Deputy Premier and Finance Minister Paula Cox announced the move in the House of Assembly on Wednesday after Shadow Education Minister Grant Gibbons called for an overhaul of the 1982 Act.

The legislation will be announced in the Throne Speech and Ms Cox hopes to table it in the next Parliamentary session. The Minister said it aims to "promote less red tape".

During Motion to Adjourn, Dr. Gibbons said: "We spent a good part of the day amending financial legislation. Back in 1999 the new Government amended the Banks and Deposit Companies Act.

"Whether it would include the Credit Union, I was told at the time no, it wouldn't, but that Government was working on an update.

"I believe the Credit Union Act is desperately in need of an overhaul," he said.

"Financial regulations have changed dramatically since 1982 but there's been no change to the Credit Union Act."

However, Ms Cox said: "The Credit Union Act is in the process of being amended. There have been a couple of consultation papers that have gone out and the legislation is going to be coming as part of the Throne Speech.

"I would be surprised if it is not something I am able to table when we come back in the new session."

Dr. Gibbons said: "There are probably a lot of Credit Union members who will be pleased to hear that."

He told MPs the Credit Union was in contravention of some provisions in the Credit Union Act 1982, in relation to the year ended December 31, 2005.

Although its loan portfolio was not to exceed 60 percent of its total assets, as of that year the Credit Union had loans on a gross basis, as a percentage of total assets, of 73 percent, and 65 percent on a net basis.

After the debate, Ms Cox told The Royal Gazette: "The current legislation was out of date and it did not reflect international best practice.

"I noted in my point of information on the floor of the House that Credit Union legislation is an item that is being worked on and a substantial amount of work has already been done in concert with the Bermuda Monetary Authority, the Credit Union management and the Ministry of Finance.

"It has been a collaborative process and the impetus was that a legislative framework for credit unions was a modern and necessary step."

She said: "Research was conducted of other jurisdictions and the World Council of Credit Unions to determine the best model for Bermuda.

"The thinking was that just as we reform and modernise, the financial legislative infrastructure for the international business sector to improve and enhance their processes so that they are more efficient, cost-effective and competitive, that same approach should be consistent for our domestic market participants.

"In both the domestic and the international financial services sector, our ethos is to promote less 'red tape' and more 'red carpet', and the controls and checks in both sectors are mindful of the need for appropriate investor protection.

"Credit Unions are a unique entity as cooperatives, valuing volunteerism, cooperation and member participation.

"In developing the new regulatory framework the Bermuda Monetary Authority and Ministry of Finance are working to ensure that the unique characteristics of the Credit Union are preserved, and to protect the interests of Credit Union members.

"Also it should be noted that a consultation paper was issued by the BMA for input and feedback and the feedback is constructive as we prepare to advance the legislative proposals."

Ms Cox said: "There is a considerable amount of engagement and work being done by all parties the Credit Union management, the BMA and the Ministry of Finance, to ensure that we get the balance right as we seek to foster dynamism and the entrepreneurial growth with proper accountability and supervisory controls."