FCA Letter to Credit Unions on Review of Sector

The FCA have issued a letter to Credit Unions based on the regulator’s most recent review of the sector.  The letter contains key information with regards to governance and changes to the Senior Managers Regime. In the letter the FCA highlight their three main concerns with regards to Credit Unions:

  • Poor governance arrangements, including the Credit Union’s systems and controls
  • A lack of understanding of regulatory requirements and Credit Union
    legislation.
  • Weaknesses in financial crime controls (money laundering prevention)

Governance Webinar

The FCA have created a webinar on Credit Union governance.  It is important that Credit Union’s Boards and Management view the webinar as it will set out the regulator’s expectations with regards to governance. The webinar can be accessed from the following link.  

Senior Managers Regime

From 1 November 2018 a new senior manager responsibility will apply:

“B-1) Responsibility for the firm’s performance of its obligations in respect of notifications and training of the Conduct Rules”

Credit Unions must assign this responsibility by the 1 November. In addition, the FCA is requesting that Credit Unions assign SMF responsibility to those who have overall responsibilities for business functions (such as lending, arrears. savings and complaints).

The letter also provides guidance on the Credit Union’s responsibilities with regards to providing staff with conduct rule training and carrying out of certification of certain staff.

Money Laundering

The FCA are also concerned that in some Credit Unions there is a lack of “Know Your Customer” (KYC) checks and plausibility reviews over income. The lack of these controls can lead to a Credit Union being used for money laundering.

Please see the FCA letter and website for further details.