CRED is available on the Internet, on CD-ROM and on paper. Its structure and contents are the same in each medium.
CRED follows the same structure as the Handbook, which consists of sourcebooks (providing sources of the FSA's requirements and guidance) and manuals (containing processes to be followed) arranged in groups according to their subject matter. A table of contents of the Handbook is provided at Appendix 1 to this sourcebook.
Each sourcebook or manual has a reference code of two or more letters. This is usually a contraction or abbreviation of its title, for use in cross-references in the text and in the index. Thus, for example the Credit Unions sourcebook abbreviates to CRED, while the Supervision 1manual abbreviates to SUP1.1 1
CRED contains the same types of provision as the Handbook. Their status is indicated by icons containing the letters below. The precise legal status of any particular provision depends upon the terms of the Act and the particular power exercised to create that provision. Schedule 4 of the Handbook lists the powers used to make the various parts of the Handbook. So what follows is only an introduction.
The letter R is used to indicate general rules made under section 138 of the Act and specialised rules made under sections 140 to 147 and other powers. The legal effect of a rule varies, depending on the power under which it is made, and on the language used in the rule - is it mandatory language or not? Most of the rules in the Handbook create binding obligations on firms (that is, authorised persons). If a firm contravenes such a rule, it may be subject to enforcement action.2
The letter E is used to indicate an evidential provision. This usually indicates a practice or procedure in relation to a rule which, if observed, will "tend to establish compliance" with the rule to which it relates. Conversely, failure to observe that practice or procedure will "tend to establish contravention" of the rule to which it relates. For example, CRED 14.3.11 G indicates that a failure of a credit union to have an internal audit function would "tend to establish contravention" of the rule (described earlier in CRED 4.3.1 G) that all firms should take reasonable care to establish and maintain such systems and controls as are appropriate to their business.
The letter G is normally used to indicate guidance given under section 157. The guidance in the Handbook relates to the operation of the Act, the rules in the Handbook and other matters. Most general guidance will be given through the Handbook, but in certain cases, where the guidance is urgent or temporary, it will be published in a separate Guidance Note. Material published in vehicles other than it Handbook or Guidance Notes, for example in newsletters or on the FSA's website, is not guidance unless it says that it is.
Guidance may be used to explain the implications of other provisions, to indicate possible means of compliance, to recommend a particular course of action or arrangement, and for other purposes. Whatever guidance is used for, it is not binding on those to whom the Act and rules apply, nor does it have 'evidential' effect. It need not be followed in order to achieve compliance with the relevant rule or other requirement. So a credit union cannot incur disciplinary liability merely because it has not followed guidance. Nor is there any presumption that departing from guidance is indicative of a breach of the relevant rule. However, credit unions should at all times take care to ensure that where the guidance refers to, or describes rules in CRED or elsewhere in the Handbook, those rules are observed.
Guidance is generally designed to throw light on a particular aspect of regulatory requirements, not to be an exhaustive description of credit unions' obligations. If a person acts in accordance with guidance in the circumstances contemplated by that guidance, then the FSA will proceed on the footing that the person has complied with the aspects of the rule or other requirement to which the guidance relates.
Rights conferred on third parties (such as credit union members) cannot be affected by guidance given by the FSA. Guidance on rules, the Act or other legislation represents the FSA's view, and does not bind the courts, for example in relation to an action for damages brought by a private person for breach of a rule, or in relation to the enforceability of a contract where there has been a breach of general prohibition on carrying on a regulated activity in the United Kingdom without authorisation). A person may need to seek his own legal advice.
G is also used for the FSA's statement of the procedure for giving statutory notices under section 395 of the Act, the FSA's policy with respect to the imposition and amount of penalties under the Act (see DEPP)2 and to indicate the arrangements made by the FSA under paragraph 7 of Schedule 1 to the Act for the investigation of complaints arising in connection with its exercise of its non-legislative functions (see COAF).2
The letter D is used to indicate directions and requirements given under various powers conferred by the Act, for example, directions under section 51(3) of the Act about the form and content of applications for Part IV permission. Directions and requirements are binding upon the persons or categories of person to whom they are addressed.
Page numbers are not important in CRED. In the paper version, page numbering starts again at the beginning of each chapter. But each page of a chapter shows:
the reference code for the sourcebook or manual;
the number and title of the chapter; and
the number and title of the section of the chapter.
For example, the first page of Chapter 3 of the Supervision manual shows at the top, on the left 'SUP 3: Auditors' and on the right 'Section 1: Application'. In addition, each page of a chapter shows, at the foot of the page, the number of the last paragraph on the page.
The main text of CRED is numbered as follows:
Further sub-paragraphs are shown by (a), (b), (c) and so on, and then by (i), (ii), (iii) and so on. For example, the third paragraph of the second section of the first chapter in the Conduct of Business sourcebook, if it were a rule, would be COB 1.2.3G. If there were two further sub-paragraphs, it would be COB 1.2.3R (1)(a)
Defined terms used in the text are shown in italic type. Where a word or phrase is in italics, its definition can be found in the HandbookGlossary. Where a word or phrase which is shown in italics in one part of the text appears without italics in another part, it is meant to be given, where un-italicised, its ordinary natural meaning.1 See CRED 13 Annex 1A 1 G (2) on the meaning of "credit union".2
CRED contains eight schedules as follows:
Schedule 1 provides a list of the detailed record keeping requirements in CRED and where they are to be found.
Schedule 2 provides a list of the detailed notification requirements in CRED and where they are to be found.
Schedule 3 provides a list of any fees and other payments for which a credit union may be liable under CRED. As details of fees and other payments appear elsewhere in the Handbook, we have also included a table of where these can be found. (Note that these will also be summarised in Schedule 3 to the relevant Handbook module in which they appear).1