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Home > Prudential Regulation Authority > Credit unions - Deposit protection

Credit unions - Deposit protection

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

Financial Services Compensation Scheme and the Single Customer View

The rules for deposit takers (ie banks, building societies and credit unions) and the Financial Services Compensation Scheme (FSCS) ensure that eligible depositors (including individuals and businesses) will be compensated up to £85,000 if a deposit taker fails.

The Deposit Guarantee Schemes Directive (DGSD) requires deposit guarantee schemes (ie the FSCS in the United Kingdom) to pay compensation to depositors in respect of covered deposits within 20 business days of the default of a deposit taker. By 2024 this is reduced to seven days.

A key element in being able to compensate depositors quickly is the requirement for deposit takers to maintain a Single Customer View (SCV) and Exclusions file, and to be able to provide them to the PRA or FSCS on request within 24 hours. Both files provide the FSCS with the information required to make a payout, with a target of seven days from default for most depositors and in any event within the timeframes prescribed by the DGSD.

Since the SCV requirements were introduced, a small number of deposit taker defaults have occurred and in each instance, by utilising the SCV, the FSCS has been able to make payments to most eligible depositors in less than seven days.

SCV requirements and guidance

SCV requirements are set out in the Deposit Protection Part in the PRA Rulebook – see External Links.
More information on the SCV is available in Chapter 8 of Supervisory Statement 18/15 ‘Depositor and dormant account protection’. Firms may also find the FSCS’s SCV guide useful when considering Deposit Protection issues – see External Links.
Some of the new requirements are summarised below, however, credit unions should refer to the PRA Rulebook and relevant supervisory statement for full details.

Exclusions file

New requirements for the exclusions file are also set out in the Deposit Protection Part in the PRA Rulebook and are in force from 1 December 2016. The rules require deposit takers to provide this information in the same format and to the same timeframe as the SCV file. The exclusions file will contain those accounts for which account holders contain or may contain eligible deposits to which the account holder is not absolutely entitled or accounts that might be inactive (eg beneficiary legally dormant, and legally disputed accounts).

Material changes

Credit unions are required to notify the PRA of any material change to their SCV systems. The PRA considers that a material change would include changes that would have a material impact on a firm’s SCV system, for example, there is likely to be a material change in a firm’s SCV system upon a merger or acquisition of a deposit book, or the introduction of a new IT system that relates to the firm’s SCV system.

SCV electronic reporting

Please note that from 1 December 2016, credit unions will no longer be able to opt out of electronic reporting. Credit unions that are currently opting out of electronic reporting for SCV will be contacted by the PRA.

Dormant accounts

Some credit unions mark accounts as inactive/dormant after a period of inactivity. For the avoidance of doubt, any account that does not meet the legal definition of dormancy as defined in section 10 of the Dormant Bank and Building Society Accounts Act 2008, must appear on the SCV file. Legally dormant accounts are accounts that meet the specific definition of being inactive for 15 years – meaning that there has been no customer-initiated transaction in the last 15 years. Such legally dormant accounts must instead be included in the credit union’s exclusions file that accompanies its SCV file.

Newly authorised credit unions

Newly authorised credit unions will be contacted by the PRA and expected to undergo FSCS verification within three months of receiving their Part 4A permissions to accept deposits.

Ongoing SCV verification

As part of the ongoing work relating to SCV for credit unions, the PRA has committed to a continuous review of a sample of credit unions’ SCV files as part of the usual supervisory work. The process will start with a request for the submission of a SCV Effectiveness Report and Marking Effectiveness Report (see External Links). This may be followed by a request for your SCV file from the FSCS. Credit unions will then receive feedback from the FSCS on the usability and quality of their SCV file and SCV policies and procedures. 

Further information on SCV can be found in the Related Links and External Links pages.