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.
3 Replies to “Another change to your savings limit”
Hi Steven,
I agree with your interpretation of the PRA’s proposal. I believe that they are trying to stifle Credit Union Growth by placing tougher restrictions, while allowing the mainstream Banks who caused the problems in the first place to continue their riskier business model.
I think this proposal should be challenged by all CU’s and by ABCUL as a restrictive and discriminative practice.
It seems to me that this law is biased in favour of the big banks and detrimental to the growing CU sector who although managed by unpaid directors are more ethical and trustworthy.
Hi Steven,
I agree with Ian on this, we need more opportunities to grow and I am not sure of the benefit to anyone in relation to this change.
It is one of a number of worrying changes set out in the proposals and does further restrict the sector.
Comments are closed.