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CRED App 2.1 Detailed contents of CRED

CRED App 2.1.1
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1

Introduction

1.1

The Credit Unions sourcebook

2

Reader's Guide

2.1

What is this guide?

2.2

Structure

2.3

Contents of CRED

2.4

Status of provisions

2.4.2

Rules: R

2.4.4

Evidential provisions: E

2.4.6

Guidance: G

2.4.11

Direction: D

2.5

Numbering: Pages

2.6

Numbering: Contents

2.7

Defined terms

2.8

Schedules

2.8.2

Transitional provision

2.8.3

Schedule 1: Rules that can be waived

2.8.4

Schedule 2: Notification requirements

2.8.5

Schedule 3: Contents of the FSA Handbook

2.8.6

Schedule 4: Powers exercised in making the Handbook

2.8.7

Schedule 5: Rights of action for damages

2.8.8

Schedule 6: Rules that can be waived

2.8.9

Schedule 7: Schedule of releases1

3

The FSA's Principles for Businesses

3.1

Application and Purpose

3.2

The Principles

3.3

Consequences of breaching the Principles

4

Senior management arrangements, systems and controls

4.1

Application and purpose

4.2

Apportionment of responsibilities

4.3

Systems and controls

4.3.1

General

4.3.5

Rules and evidential provisions

4.3.15

Committee of management

4.3.19

Organisation

4.3.28

Documentation of systems of control

4.3.32

Accounting records and systems

4.3.37

Compliance

4.3.41

Management information

4.3.46

Information for the FSA

4.3.47

Personnel

4.3.50

Internal Audit

4.3.61

Business planning

4.3.69

Documentation of policies and procedures

4.3.72

Business continuity

5

Threshold conditions

5.1

Application and purpose

5.2

The Conditions

6

The Approved persons Regime

6.1

Application and purpose

6.2

The Statements of Principle of Code of Practice for Approved Persons (APER)

6.2.2

Introduction

6.2.4

The Statements of Principle

6.2.6

Code of Practice for Approved persons

6.2.7

Factors relevant to Statements of Principle

6.2.9

Enforcement procedures

6.3

Approved Persons

6.3.2

Introduction

6.3.3

Purpose of the regime

6.3.4

Controlled functions

6.3.5

Specification of functions

6.4

Assessing fitness and propriety

6.4.1

Purpose

6.4.2

Background

6.4.3

Assessing fitness and propriety

7

Investment and borrowing

7.1

Application, purpose and interpretation

7.2

Investment

7.2.1

Types of investment

7.2.2

Maturity of investments5

7.2.4

Cash in custody of officers

7.2.5

Investment conditions no longer satisfied

7.2.6

Transactions between credit unions

7.3

Borrowing and Financial risk management2

7.3.16

Borrowing

7.3.7

Financial risk management policy statement

27A

Shareholding

2 7A.1

Application and purpose

2 7A.2

Members' shares

2 7A.2.1

Maximum shareholdings

2 7A.2.5

Joint accounts

2 7A.2.7

Dividends on shares

2 7A.3

Deposits6

2 7A.4

Insurance against fraud or other dishonesty

2 Ann 1

Insurance against fraud or other dishonesty

8

Capital requirements

8.1

Application and purpose

8.2

Components of capital

8.3

Version 1 credit unions

8.3.1

Requirement to maintain positive net worth

8.3.5

Building reserves

8.3.9

Minimum initial capital

8.3.12

Capital requirement for version 1 credit unions wishing to lend amounts of more than £5,000 in excess of the borrowing member's shareholding

8.3.14

Capital requirements for large version 1 credit unions

8.4

Version 2 credit unions

8.4.3

Minimum initial capital

9

Liquidity

9.1

Application, purpose and interpretation

9.2

General requirements

9.3

Minimum liquidity requirements

10

Lending to members5

10.1

Application and purpose

10.2

General requirements

10.3

Lending limits

10.4

Large exposures

10.5

Provisioning

11

Conduct of business4

11.1

Introduction

11.2

Financial promotion

4 11.3

Statutory status disclosure

11.47

Entering into a distance contract for accepting deposits7

9

[deleted]9

13

Registration and Authorisation

13.1

Application and purpose

13.2

Introduction

13.2A6

Use of name "credit union"6

13.3

What does registration mean?

13.4

Process for registration

13.5

What does authorisation involve?

13.6

Process for Part IV permission

13.7

Applying for approved persons status

13.8

The FSA's decision making procedures

Ann 1

Requirements of Registration [table]

Ann 1A8

Common bond8

Ann 1B8

Section 1 of the Credit Unions Act 1979 (as amended)8

Ann 1C8

Qualifications approved by the FSA (and the Registry of Friendly Societies)8

3 Ann 2

Eligibility for membership of a credit union

14

Supervision

14.1

The FSA's approach to supervision

14.1.1

Application and purpose

14.1.6

The FSA's risk based approach to supervision

14.1.7

Tools of supervision

14.2

Information gathering by the FSA on its own initiative

14.2.1

Application and purpose

14.2.7

Information gathering by the FSA on its own initiative: background

14.2.9

Information gathering by the FSA on its own initiative: cooperation by credit unions

14.2.13

"Mystery Shopping"

14.3

Auditors

14.3.1

Application and purpose

14.3.3

Appointment of auditors

14.3.5

Auditors' qualifications

14.3.12

Auditors' independence

14.3.16

Credit unions' cooperation with their auditors

14.3.20

Notification of matters raised by auditor

14.3.22

Rights and duties of all auditors

14.4

Skilled persons

14.4.1

Application and purpose

14.4.3

The FSA's power

14.4.4

Policy on the use of skilled persons

14.4.5

Appointment and reporting process

14.4.6

Duties of a credit union

14.4.8

Confidential information privilege

14.5

Application to vary or cancel Part IV permission

14.5.1

Application and purpose

14.5.5

Introduction

14.5.6

Applications for variation of permission

14.5.15

Applications for cancellation of permission

14.5.29

Ending authorisation

14.5.30

Additional guidance

14.6

Individual requirements

14.6.1

Application and purpose

14.6.4

The FSA's powers to set individual requirements on its own initiative

14.6.7

Criteria for varying a credit union's permission

14.7

Waiver and modification of rules

14.7.1

Application and purpose

14.7.3

Introduction

14.7.5

Applying for a waiver

14.7.11

Notification of altered circumstances relating to waivers

14.7.12

Publication of waivers

14.7.15

Varying waivers

14.7.16

Revoking waivers

14.7.19

Decision making

14.8

Individual guidance

14.8.1

Application and purpose

14.8.4

Making a request for individual guidance

14.8.7

Giving individual guidance to a credit union on the FSA's own initiative

14.8.9

Reliance on individual guidance

14.9

Notifications to the FSA

14.9.1

Application and purpose

14.9.3

General notification requirements

14.9.13

Core information requirements

14.9.15

Inaccurate, false or misleading information

14.9.18

Form and method of notification

14.10

Reporting requirements

14.10.1

Application and purpose

14.10.4

General provisions on reporting

14.10.5

Quarterly Return

14.10.7

Annual Return

14.10.9

Accounts and audit

5 14.10.12

Financial penalties for late submission of reports

14.10.136

Controllers and close links 6

Ann 1

Accounts and audit - Friendly and Industrial and Provident Societies Act 1968

15

Decision procedure, penalties and enforcement10

10

15.1

Application and purpose

15.2

Industrial and Provident Societies legislation10

10

15.3

Decision Procedure and Penalties manual10

10

15.4

Enforcement Guide10

10

3 15.5

[deleted]10

10

Ann 1

Enforcement Powers [table - powers available under Industrial and Provident Societies legislation and the Credit Unions Act 1979]

Ann 2

[deleted]10

10

3 Ann 3

[deleted]10

10

16

[deleted]10

17

Complaint handling procedures for credit unions5

2 17.1

Application and purpose

17.2

Internal complaint handling procedures: general requirements

17.3

Eligible complainants

17.4

Internal complaint handling procedures: additional requirements

17.5

Time limits for dealing with a complaint

17.6

Record keeping and reporting

17.7

Co-operation by credit unions with the Ombudsman

5 Ann 1

Complaints report