The PRA issued their annual letter to Credit Unions on 14 October 2022. Similar to previous years, there are two versions of the letters one for those with over £15million in assets and/or 10,000 members and one for those under those limits.
There were a number of key messages within the letters including:
- Cost of Living– With the current economic challenges the PRA expect Credit Unions to ensure they are realistic and cover the income and expenditure over the next 3 years. For larger Credit Unions they expect stress/scenario testing to also be carried out.
- Provision Waiver– The PRA have reminded Credit Unions that the provision waiver will end on 31 December 2022 and Credit Unions should plan for the removal of this waiver.
- Succession Planning– The need for succession planning was a key message in the PRA’s letters.
- Operational Notifications– In addition, the PRA reminded Credit Unions of the need to notify the PRA where there are key operational changes such as change of banking platform.
- Single Customer View– A number of common issues in SCV files and procedures were also highlighted.
Credit Unions with Insufficient Resources
One of the most important messages was in their letter to smaller Credit Unions where the PRA have stated they will contact Credit Unions in any of the following categories
- Capital Ratio under 5%
- Repeatedly fail to submit returns on time
- Insufficient or ineffective Directors
The PRA will expect plans, usually within 3 months, from those contacted regarding how they will deal with the issues including timescales for actions. Where Credit Unions are unable to give such assurances that it is capable of compliance then the PRA have stated that they should be looking at plans to wind down or carry out a transfer of engagements.
Further Information
For more information on the letters please see the PRA web page.