Welcome to the Credit Unions sourcebook, known as CRED for short. CRED is credit unions' guide to the main FSAHandbook, which contains all of the rules and guidance for all regulated firms, including credit unions. It puts into effect the FSA's commitment to provide credit unions with their own specialist sourcebook. The Handbook is a vast document and many parts of it are not relevant to credit unions. So we have tried to distil into CRED those parts of the Handbook which are most relevant. We believe that CRED contains enough information on what the FSA requires of credit unions to meet most of their day-to-day operational needs.1
Northern Ireland credit unions are not covered by the Handbook or by CRED. They are exempt from the general prohibition on carrying on a regulated activity, and do not need to be authorised persons. Their exemption is reflected in the definition of credit union in the Handbook and CRED: "a body corporate registered under the Industrial and Provident Societies Act 1965 as a credit union in accordance with the Credit Unions Act 1979, which is an authorised person" (see CRED 2.7.1G for an explanation of defined terms). Northern Ireland credit unions are registered under their own separate legislation, not under the Industrial and Provident Societies Act 1965 and the Credit Unions Act 1979. The Credit Unions Act 1979 permits the Treasury to make reciprocal arrangements with the appropriate authority in Northern Ireland for the law applicable to credit unions registered in Great Britain to be applied to credit unions registered in Northern Ireland, when the latter operate in Great Britain (and for the law applicable to credit unions registered in Northern Ireland to be applied to credit unions registered in Great Britain, when the latter operate in Northern Ireland). No such arrangements have yet been made.1
CRED does not encompass the requirements associated with any regulatory permission other than a Part IV permission to accept deposits. A credit union undertaking deposit-taking activity in relation to retail banking services would need to comply with the requirements in BCOBS.7 There are also additional requirements in the Handbook for credit unions that are CTF providers in relation to cash deposit CTFs.4 Other permissions are covered elsewhere in the Handbook. Thus, for example, a credit union seeking a permission to undertake a regulated mortgage activity3 would need to comply with the requirements in MCOB, and a credit union seeking a permission to undertake insurance mediation activity in relation to non-investment insurance contracts would need to comply with the requirements in ICOBS6.32336
Every credit union is either a version 1 credit union or a version 2 credit union. The difference is that a version 1 credit union is subject to a requirement that it must not lend more than 15,0005 in excess of a member's shareholding. CRED 14.5 (Applications to vary or cancel permission) describes how a credit union can switch between the two versions.5
The approach we have taken in assembling the various chapters of CRED is as follows:
Where there are requirements that are specific to credit unions we have spelt these out in full. The chapters containing these requirements are Chapters 7 - 10 and Chapter 17.
Where there are requirements in the Handbook relating to the day-to-day operations of a wider range of firms than credit unions, we have provided substantive guidance on the way in which those requirements should apply to credit unions. The relevant chapters are 3 - 6, 11, 12 and 14. It should be noted that in these chapters, the guidance refers to rules which exist elsewhere in the Handbook and which must be observed by credit unions.
Where there are requirements in the Handbook covering to a wider range of firms than credit unions, but which do not relate to the day-to-day operations of credit unions, we have provided a brief summary of those requirements. In circumstances in which one of these chapters became relevant to a credit union, we would expect credit unions to access the full text in the Handbook. The relevant chapters are 13, 15 and 16.
Where there are requirements in the Handbook that do not relate to credit unions, the relevant chapter of the Handbook has not been covered in CRED. The various other specialist sourcebooks and the Training and Competence manual (TC) are examples of this.
The language used in CRED reflects the requirements of the main Handbook. Thus, in those parts of CRED which apply across the wider regulated community, the terminology used is that of the main Handbook. For example, in Chapter 3 (Principles for Businesses) reference is made to firms, clients and customers. Conversely, in those sections of CRED which are specific to credit unions (such as Chapters 7 - 10), terminology specific to credit unions is used.