The CREDS consultation paper launched at the end of June by the PRA set out proposals that would limit the level of savings that members could hold in a Credit Union to the amount covered by the Financial Services Compensation Scheme (FSCS). The PRA announced on Friday that the level of protection offered to individual members by the FSCS will drop to £75,000 after 31 December 2015. If the PRA’s proposals are accepted this could further limit a member’s shareholding in a Credit Union.
While most Credit Unions have too many shares compared to loans or share balances well below this limit the PRA’s proposals have still received criticism by a number of commentators. This is because they view the limitation on Credit Unions taking shares as making the sector look more risky than their competitors and customers in more need of protection. There is no such proposal to limit the savings banks can hold despite them being able to take part in riskier activities and transactions; the cost of which the country is still recovering from.