The Credit Unions sourcebook

Part

CRED Credit Unions

Chapter

The Credit Unions sourcebook

Printed on: 05/07/2024

Rulebook at: 01/01/2005

CRED App 2

The Credit Unions sourcebook

CRED App 2.1

Detailed contents of CRED

01/12/2004

CRED App 2.1.1

Introduction

1.1

The Credit Unions sourcebook

Reader's Guide

2.1

What is this guide?

2.2

Structure

2.3

Contents of CRED

2.4

Status of provisions

2.4.2

Rules: R

2.4.4

Evidential provisions: E

2.4.6

Guidance: G

2.4.11

Direction: D

2.5

Numbering: Pages

2.6

Numbering: Contents

2.7

Defined terms

2.8

Schedules

2.8.2

Transitional provision

2.8.3

Schedule 1: Rules that can be waived

2.8.4

Schedule 2: Notification requirements

2.8.5

Schedule 3: Contents of the FSA Handbook

2.8.6

Schedule 4: Powers exercised in making the Handbook

2.8.7

Schedule 5: Rights of action for damages

2.8.8

Schedule 6: Rules that can be waived

2.8.9

Schedule 7: Schedule of releases

The FSA's Principles for Businesses

3.1

Application and Purpose

3.2

The Principles

3.3

Consequences of breaching the Principles

Senior management arrangements, systems and controls

4.1

Application and purpose

4.2

Apportionment of responsibilities

4.3

Systems and controls

4.3.1

General

4.3.5

Rules and evidential provisions

4.3.15

Committee of management

4.3.19

Organisation

4.3.28

Documentation of systems of control

4.3.32

Accounting records and systems

4.3.37

Compliance

4.3.41

Management information

4.3.46

Information for the FSA

4.3.47

Personnel

4.3.50

Internal Audit

4.3.61

Business planning

4.3.69

Documentation of policies and procedures

4.3.72

Business continuity

Threshold conditions

5.1

Application and purpose

5.2

The Conditions

The Approved persons Regime

6.1

Application and purpose

6.2

The Statements of Principle of Code of Practice for Approved Persons (APER)

6.2.2

Introduction

6.2.4

The Statements of Principle

6.2.6

Code of Practice for Approved persons

6.2.7

Factors relevant to Statements of Principle

6.2.9

Enforcement procedures

6.3

Approved Persons

6.3.2

Introduction

6.3.3

Purpose of the regime

6.3.4

Controlled functions

6.3.5

Specification of functions

6.4

Assessing fitness and propriety

6.4.1

Purpose

6.4.2

Background

6.4.3

Assessing fitness and propriety

Investment and borrowing

7.1

Application, purpose and interpretation

7.2

Investment

7.2.1

Types of investment

7.2.2

Maturity of investments

7.2.4

Cash in custody of officers

7.2.5

Investment conditions no longer satisfied

7.2.6

Transactions between credit unions

7.3

Borrowing and Financial risk management

7.3.1

Borrowing

7.3.7

Financial risk management policy statement

Shareholding

7A.1

Application and purpose

7A.2

Members' shares

7A.2.1

Maximum shareholdings

7A.2.5

Joint accounts

7A.2.7

Dividends on shares

7A.3

Deposits

7A.4

Insurance against fraud or other dishonesty

Ann 1

Insurance against fraud or other dishonesty

Capital requirements

8.1

Application and purpose

8.2

Components of capital

8.3

Version 1 credit unions

8.3.1

Requirement to maintain positive net worth

8.3.5

Building reserves

8.3.9

Minimum initial capital

8.3.12

Capital requirement for version 1 credit unions wishing to lend amounts of more than £5,000 in excess of the borrowing member's shareholding

8.3.14

Capital requirements for large version 1 credit unions

8.4

Version 2 credit unions

8.4.3

Minimum initial capital

Liquidity

9.1

Application, purpose and interpretation

9.2

General requirements

9.3

Minimum liquidity requirements

Lending to members

10.1

Application and purpose

10.2

General requirements

10.3

Lending limits

10.4

Large exposures

10.5

Provisioning

Conduct of business

11.1

Introduction

11.2

Financial promotion

11.3

Statutory status disclosure

11.4

Entering into a distance contract for accepting deposits

Money Laundering

12.1

Introduction

12.1.1

What is Money laundering?

12.2

Money laundering and the FSA

12.3

Identification of the Client

12.4

External Reporting

12.5

Government and Financial Action Task Force findings

12.6

Compliance Monitoring

12.7

Record keeping

Registration and Authorisation

13.1

Application and purpose

13.2

Introduction

13.2A

Use of name "credit union"

13.3

What does registration mean?

13.4

Process for registration

13.5

What does authorisation involve?

13.6

Process for Part IV permission

13.7

Applying for approved persons status

13.8

The FSA's decision making procedures

Ann 1

Requirements of Registration [table]

Ann 1A

Common bond

Ann 1B

Section 1 of the Credit Unions Act 1979 (as amended)

Ann 1C

Qualifications approved by the FSA (and the Registry of Friendly Societies)

Ann 2

Eligibility for membership of a credit union

Supervision

14.1

The FSA's approach to supervision

14.1.1

Application and purpose

14.1.6

The FSA's risk based approach to supervision

14.1.7

Tools of supervision

14.2

Information gathering by the FSA on its own initiative

14.2.1

Application and purpose

14.2.7

Information gathering by the FSA on its own initiative: background

14.2.9

Information gathering by the FSA on its own initiative: cooperation by credit unions

14.2.13

"Mystery Shopping"

14.3

Auditors

14.3.1

Application and purpose

14.3.3

Appointment of auditors

14.3.5

Auditors' qualifications

14.3.12

Auditors' independence

14.3.16

Credit unions' cooperation with their auditors

14.3.20

Notification of matters raised by auditor

14.3.22

Rights and duties of all auditors

14.4

Skilled persons

14.4.1

Application and purpose

14.4.3

The FSA's power

14.4.4

Policy on the use of skilled persons

14.4.5

Appointment and reporting process

14.4.6

Duties of a credit union

14.4.8

Confidential information privilege

14.5

Application to vary or cancel Part IV permission

14.5.1

Application and purpose

14.5.5

Introduction

14.5.6

Applications for variation of permission

14.5.15

Applications for cancellation of permission

14.5.29

Ending authorisation

14.5.30

Additional guidance

14.6

Individual requirements

14.6.1

Application and purpose

14.6.4

The FSA's powers to set individual requirements on its own initiative

14.6.7

Criteria for varying a credit union's permission

14.7

Waiver and modification of rules

14.7.1

Application and purpose

14.7.3

Introduction

14.7.5

Applying for a waiver

14.7.11

Notification of altered circumstances relating to waivers

14.7.12

Publication of waivers

14.7.15

Varying waivers

14.7.16

Revoking waivers

14.7.19

Decision making

14.8

Individual guidance

14.8.1

Application and purpose

14.8.4

Making a request for individual guidance

14.8.7

Giving individual guidance to a credit union on the FSA's own initiative

14.8.9

Reliance on individual guidance

14.9

Notifications to the FSA

14.9.1

Application and purpose

14.9.3

General notification requirements

14.9.13

Core information requirements

14.9.15

Inaccurate, false or misleading information

14.9.18

Form and method of notification

14.10

Reporting requirements

14.10.1

Application and purpose

14.10.4

General provisions on reporting

14.10.5

Quarterly Return

14.10.7

Annual Return

14.10.9

Accounts and audit

14.10.12

Financial penalties for late submission of reports

14.10.13

Controllers and close links

Ann 1

Accounts and audit - Friendly and Industrial and Provident Societies Act 1968

Enforcement

15.1

Application and purpose

15.2

Investigation and enforcement powers

15.3

The FSA's approach to the use of its investigation and enforcement powers

15.4

The FSA's policies and procedures for taking enforcement action

15.5

Financial penalties for late submission of reports

Ann 1

Enforcement Powers [table - powers available under Industrial and Provident Societies legislation and the Credit Unions Act 1979]

Ann 2

Enforcement Powers [table - powers referred to in ENF]

Ann 3

Financial Penalties [table - indicative scale of financial penalties for reports no more than 28 days late]

Decision making manual (DEC)

16.1

Application and purpose

16.2

Introduction

16.3

Guidance on DEC

16.3.1

16.3.3

16.3.4

16.3.5

16.3.10

Complaint handling procedures for credit unions

17.1

Application and purpose

17.2

Internal complaint handling procedures: general requirements

17.3

Eligible complainants

17.4

Internal complaint handling procedures: additional requirements

17.5

Time limits for dealing with a complaint

17.6

Record keeping and reporting

17.7

Co-operation by credit unions with the Ombudsman

Ann 1

Complaints report

01/01/2005