The PRA have today issued Consultation Paper 7/22 on their proposed changes to the regulatory rules for Credit Unions.
New Products
Additional Activities
Currently, mortgages, longer term investments, larger loans and transactional accounts fall within the definition of additional activities. Credit Unions offering these activities are subject to the requirements of CUP10.3 and are required to monitor the ratios set out in SS2/16. The PRA plan to add corporate lending and the provision of consumer credit (including hire purchase, conditional sale agreements and credit cards) to the list of additional activities (some of these activities will be subject to the new legislation being passed).
Investments
Credit Unions with over £10million in assets will also need to meet investment requirements including having no more than 75% of the Credit Union’s capital invested with a single counterparty.
Supervisory Statement
The PRA have proposed a new Supervisory Statement that will replace SS2/16. Some of the proposed changes to SS2/16 include:
- Additional requirements in terms of liquidity management
- Cases where additional capital would be required
- Credit Unions offering mortgages will be expected to consider relevant sections of SS20/15
- Credit Unions with over £100m in assets will be expected to consider the steps and resources needed to wind down and achieve a transfer of engagements in an orderly manner.
- Further considerations for Credit Unions offering additional services
- Expectations around operational risk management
- Clarification on business plan, governance, internal audit and risk management requirements.