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Home > Prudential Regulation Authority > Previous updates

Previous updates

Updates Rules and legislation |  Depositor protection Financial returns |  Other forms | Statistics | Authorisation and registration | Resources | Pre 2016 updates

This page provides archived updates published in:
  • 2015
  • 2014

For recent information see the credit unions updates page.


December 2015 

Update on 11 December 2015 - The CREDS rules in the PRA Rulebook require a credit union to maintain an internal audit function. CREDS guidance states the independent audit function should be independent of all the functions it inspects. The PRA has not set out in its guidance how this function is performed. In practice many credit unions fulfil this requirement via the activities of their supervisory committee. In the past few years, the PRA has started to see some of the larger credit unions supplementing the activities of their supervisory committees by purchasing internal audit services from a third party. The PRA understands that in some cases these services are provided by the same firm that provides the credit union’s external audit.
Where appropriate, the use of third parties for internal audit services can be very positive and has the capacity to provide supervisory committees and credit unions with additional challenge and/or assurance with respect to how they run their institutions. However, it is the PRA’s view that if external audit and internal audit services are provided by the same third party company the internal audit function cannot genuinely retain its independence. If credit unions have such arrangements in place, the PRA expects them to take steps – at an appropriate point such as a break in the existing contract – to ensure that any services are provided by separate parties.  We intend to cover this matter in a supervisory statement to be issued in early 2016.

November 2015

Update on 25 November 2015 - In Autumn 2015 the PRA supported a series of FCA-led workshops throughout the United Kingdom for credit unions about the Senior Managers and Certification regime, and to ensure they are prepared for the grandfathering deadline of 8 February 2016 and the start of the new regimes on 7 March 2016. The slides are available on the FCA's website (links below), and firms are reminded to refer to the 7 July 2015 item below, start preparing their submissions on Connect and stay updated of developments on the dedicated Strengthening Accountability webpage.

October 2015

Update on 15 October 2015 - Following the recommendations of the Fair and Effective Markets Review (FEMR), HM Treasury issued a consultation on the extension of the accountability regime, as well as changes to some areas relevant for banks, building societies, credit unions and PRA-designated firms as they prepare for implementation on 7 March 2016 - see the Senior Managers and Certification Regime: extension to all FSMA authorised persons. Readers may also find it useful to refer to the Bank of England and Financial Services Bill.
The new Senior Managers and Senior Insurance Managers regimes will be implemented on 7 March 2016 and firms should continue to make preparations to meet the deadlines, including 8 February 2016 for the submission of grandfathering notifications and relevant documentation. Firms should continue to refer to the dedicated Strengthening Accountability webpage.
Update on 12 October 2015 - Attendee feedback from the Financial Conduct Authority’s workshops for credit unions has been very positive, with many remarking that the workshop has given them a much better understanding of the regimes and what they need to do to prepare for their introduction. The PRA and FCA encourage credit unions to attend these sessions as part of their preparations. The workshops continue to 11 November – for further information and contact details, please visit the FCA’s events page.

September 2015

Update on 3 September 2015 - On 2 September, the Financial Conduct Authority issued invitations to firms and industry stakeholders to its workshops for credit unions. For further information and contact details, please visit the FCA’s events page.

August 2015

Update on 10 August 2015 - PRA Annual Assessment 2015 - Category 5 Credit Unions
In August 2015, the PRA wrote to category 5 credit unions with the findings of the 2015 assessment. Credit unions received one of four letters, depending on which peer group they fell into – the letters are attached in Resources.

July 2015

Update on 7 July 2015 - the PRA and Financial Conduct Authority published a package of policy on the introduction of the new Senior Managers Regime (SMR) and Certification Regime (CR) for UK banks, building societies and credit unions. Firms will have until 8 February 2016 to notify the regulators (PRA and FCA) of the names of their senior staff who will be senior managers under the new regime. The new regimes will come into force on 7 March 2016.

Senior Managers Regime
For credit unions the SMR will focus accountability on key decision makers and cover fewer individuals than the Approved Persons Regime (APR).
The rules state that a credit union must appoint at least one individual to perform:
SMF8               Credit Union Senior Manager function    (PRA/FCA function); and
SMF17             Money laundering reporting function       (FCA only function).
Individuals currently approved to perform a Significant Influence Function (SIF) under the APR will be eligible to grandfather into the SMR, ie they would be able to perform a Senior Management Function (SMF) equivalent to the role they are currently approved for without requiring further approval.
Certification Regime
Credit unions will be required to assess and certify at least annually the fitness and propriety of employees deemed capable of causing significant harm to the credit union or any of its members.
What do credit unions need to do?

Credit unions will need to take action to prepare for implementation, including the following steps to:

  1. discuss how the key responsibilities will be allocated. In particular, to consider the allocation of Prescribed Responsibilities set out in the PRA’s rules;
  2. identify which existing SIFs will grandfather into SMFs;
  3. using the simplified set of prescribed responsibilities for credit unions, start drafting the Statements of Responsibilities for the relevant individuals;
  4. understand the requirements of the SMR, CR and Conduct Rules; and
  5. start developing the content and format of the Responsibilities Map, taking into account the size, business model and structure of the credit union.

To grandfather individuals, credit unions must submit the following to the PRA and FCA no later than 8 February 2016:
  • a notification form containing details of all current SIFs  to grandfather to an SMF (Form K);
  • a Statement of Responsibilities for each individual (SOR – Grandfathering form); and
  • a Responsibilities Map.

Further information
A summary of the Certification Regime, Statements of Responsibilities and Responsibilities Map as they relate to credit unions is attached. SMR: Certification Regime and Responsibilities Map.
Information about the new regimes and a list of publications and forms are available on the dedicated Strengthening Accountability webpage. Forms should not be submitted yet. Further information on how to do this, and any supporting notes for credit unions, will be issued in Q4.
Update on 2 July 2015 - the PRA published slides from an industry briefing on Consultation Paper 22/15 ‘Reform of the legacy Credit Unions sourcebook’. A copy of the slides from the event is available below:

June 2015

Update on 24 June 2015 - the PRA and Financial Conduct Authority (FCA) published joint consultation CP22/15 'Reform of the legacy Credit Unions Sourcebook'. For more details please see Consultation Paper 22/15.

March 2015

Dormant accounts

The PRA is increasingly being asked how credit unions should treat their dormant accounts.  The PRA has noted the following points as a result of this which credit unions should note and act upon where necessary:
  1. Some credit unions pool together dormant accounts.  Credit unions must ensure that they are still able to identify and allocate funds to individual members in order to meet applicable Single Customer View requirements.
  2. In no circumstances can such money pooled together be used to count towards a credit union’s capital.  The money is due to members and cannot be called upon in the event of financial stress.
  3. Neither CREDS nor the credit union regulatory returns distinguish between active and dormant members.  Dormant members count towards membership for the purposes of calculating the capital requirement.


August 2014

PRA Annual Assessment 2014 - Category 5 credit unions

In March 2013 the PRA wrote to firms confirming their status for supervision purposes. The vast majority of credit unions were categorised as “Category 5” firms. The PRA will not review category 5 credit unions individually but rather will conduct an annual assessment as part of a large peer group. In August 2014, the PRA wrote to category 5 credit unions with the findings of the 2014 assessment.  Credit unions received one of three letters, depending on  whether they were on track to meet the enhanced capital requirements that came fully into force at the end of September 2014 and where they are geographically located – the letters are attached below in Key Resources.

2014 - Q2

Credit unions are not the same as Banks and Building Societies

The PRA has noted that a number of credit unions are marketing themselves – particularly on their websites – as offering similar services to those offered by banks and/or building societies. The PRA has also noted a number of credit unions stating on their websites that they are subject to a similar regulatory regime to banks and/or building societies. In making these statements, credit unions are misrepresenting their situation and the products and services they can offer their members. Credit unions should consider whether statements on their websites are appropriate and take steps to ensure the description of services offered is accurate.

2014 - Q1

Interest-bearing shares - relevant to credit unions in Great Britain only

Interest-bearing shares give the member the right to a contractual rate of interest – regardless of the profits of a credit union. Credit unions should not advertise a specific rate (of dividend or interest) on shares that are dividend-bearing. In doing so, they are creating an obligation to pay a specific return to their members, but are doing so without meeting the conditions for issuing interest-bearing shares. If a credit union wants to advertise a specific rate, it should issue shares that are interest bearing. The rules in respect of the payment of interest apply irrespective of whether shares are held within an Individual Savings Account.

Before issuing interest-bearing shares the credit union must check that its registered rules allow this and that the credit union has submitted annual audited accounts to the PRA showing that it holds reserves of at least the higher of £50,000 or 5% of total assets. It is important to note that reserves are not the same as regulatory capital and subordinated loans and provisions for bad debt will not count towards the reserves figure.

The credit union must also secure its auditor’s confirmation that it satisfies the conditions specified under section 7A(1)(b) Credit Union Act (CUA) 1979 using this report.  The report must be submitted to the PRA before a credit union issues interest-bearing shares (initial report), and then after each financial year end of the credit union (annual report).

The annual report must be submitted by the due date for submission of the credit union’s annual supervisory return (CY). Credit unions are also required to notify the PRA using this form.

2013 - Q3

PRA tests on credit unions data

When credit unions submit data to the PRA, it is essential that the figures submitted are accurate and complete. Without good quality financial information, the PRA cannot supervise credit unions effectively and if poor quality information is submitted, it may cause the PRA to question the competence and capability of those in charge at a credit union.

The PRA periodically tests the accuracy of the data submitted by credit unions The PRA has produced a document setting out details of these tests. It also summarises key rules and guidance credit unions should be aware of when submitting data. 

Credit Unions Supervision Team address

Credit Union Supervision Team
Prudential Regulation Authority
20 Moorgate
London EC2R 6DA