The PRA has sent letters to category 5 Credit Unions setting out their assessment of the sector. The letter is also of interest to non-category 5 Credit Unions as it highlights where the regulator is focusing. The main issues raised by the Regulator are:
- Single Customer View- From 1 December Credit Unions must be able to produce the SCV file in a new standardised format and within 24 hours. The exemption for small Credit Unions being able to opt-out of producing the file electronically also disappears.
- Governance- The Regulator emphasised the importance of ensuring you comply with section 10 of their Credit Union rulebook. In addition, they reminded Credit Unions carrying out additional services that they required to have a financial risk management policy. Directors of these Credit Unions should also assess and monitor the risks associated with carrying out these activities on a monthly basis.
- Strategic Planning- The PRA also included a section for Credit Unions growing quickly to emphasise the importance of ensuring capital grows along with assets. They expect the growth of these Credit Unions to be in line with their capital appetite statements.
- Projections- With the recent cut to bank interest rates the PRA has asked some Credit Unions to consider the impact on their projections. This would be prudent for all Credit Unions where this would have a material impact on projected results.