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The Prudential Regulation Authority (PRA) regulates approximately 500 credit unions in the United Kingdom. This section contains useful information including the rules and legislation for credit unions. Please use the links at the top of this page to access the relevant information. For the latest updates for credit unions, see below.
Readers may also find it useful to refer to 'The PRA's approach to banking supervision' for the details on how the PRA supervises credit unions (available under Related Links).
On 4 July 2016 the PRA published Consultation Paper (CP) 24/16 'Credit union regulatory reporting'. The CP sets out proposals for changes to the reporting requirements that apply to credit unions: these replace the returns that must currently be submitted and require that the new returns be submitted electronically. Click on the link to the consultation below for more information.
Credit union regulatory reporting - CP24/16
The Senior Managers Regime (SMR) came into force on Monday 7 March. Key points for credit unions from the new regime are highlighted below:
- Senior Management Function (SMF) 8 is the the only mandatory PRA-designated function for credit unions (SMF17 Money Laundering Reporting Officer is a mandatory FCA-designated function). While credit unions have the option to do so, there is no PRA requirement or expectation to make use of the other SMFs (eg Chief Finance Function (SMF2) or Chairman Function (SMF9)). More than one individual can perform the SMF8.
- There are 9 mandatory Prescribed Responsibilities that apply to credit unions. A credit union must ensure it has at least one person (who must be an SMF) designated as responsible for each one of these responsibilities. There are additional Prescribed Responsibilities which apply to banks and building societies of a certain size. Larger credit unions may wish to allocate these among their SMFs but are neither required nor expected to do so.
- Applications for pre-approval as an SMF8 (or, if applicable another SMF in a credit union) should be accompanied by a Statement of Responsibilities setting out the key responsibilities which the candidate will have in their role. Credit unions can use the Connect system to submit their applications. The system will allow them to access a template Statement of Responsibilities. The number of applications under the SMR is expected to reduce for credit unions relative to the Approved Persons Regime, and the PRA will only contact credit unions where necessary. Credit unions are also required to produce, submit and maintain a Responsibilities Map setting out their governance arrangements. Responsibilities Maps should reflect the size and complexity of the underlying institutions; for small credit unions with a straightforward business model a relatively simple plan will suffice.
Where an individual is put forward for approval, the PRA will require credit unions to attach the individual's CV to the application.
Update on 5 February - On 1 February 2016, the PRA held an industry briefing on Policy Statement 4/16 ‘Reform of the legacy Credit Unions sourcebook’. A copy of the slides from the event is available below. A link to the information published by the Financial Conduct Authority (FCA) in respect of this statement is also available below.
The reform of the legacy Credit Unions sourcebook – presentation to credit union trade associations.
FCA PS16/1: Reform of the legacy Credit Union sourcebook
Update on 1 February - The PRA and FCA published PS4/16’ Reform of the legacy Credit Unions sourcebook’. The PS includes feedback to CP22/15 published jointly in June 2015, PRA final rules and a supervisory statement intended to be read in conjunction with the rule instrument, and FCA final rules and guidance. The PS also contains the FCA changes to the Credit Unions Sourcebook as a result of CP14/31 relevant to the accountability regime. The changes following PRA and FCA CP22/15 and CP15/21 will come into force on 3 February 2016 with the exception of PRA rules on whistleblowing (Credit Unions 12), which come into force 7 September 2016 - see Credit Unions 18 for transitional rules for the period 7 March - 6 September 2016. The changes following FCA CP14/31 will enter into force on 7 March 2016 (in line with the other provisions related to the accountability regime).
Reform of the legacy Credit Unions sourcebook – PS4/16