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The PRA have today published Policy Statement 6/20. This statement introduces their proposed capital changes which were set out in Consultation Paper 28/19. The changes will make a large difference to Credit Unions with assets over £10 million with a graduated capital requirement being introduced. Our blog of 24 October which covered the consultation paper has more information on the changes. It can be found be clicking here. 

It should be remembered that where your capital ratio is below 10% you will be required to transfer 20% of your surplus (or such lesser amount to take your capital to 10%). 

For Credit Unions with a capital ratio below 5% there will however be greater monitoring. Credit Unions in this position will be expected to engage with the regulator on its ongoing sustainability and its capacity to budget and business plan. Credit Unions in this position are therefore likely to be under greater regulatory scrutiny and pressure. If you are in this position please see our business plan pages.

The requirements of section 10 of the PRA rulebook have also been updated in terms of what is to be reported annually to members at the AGM and the additional requirement for Credit Unions to consider the risks where it has more than 15,000 members . The PRA have also made changes to Supervisory Statement 2/16 with the capital requirements changing and paragraphs 4.1 to 4.4 as well as the table being updated.  

Useful Links

The Policy Statement can be found here.

The Rulebook changes can be found here

Supervisory Statement 2/16- Updated March 2020 can be found here