Subject to the general limitations on its powers contained in the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) Order 1985 (as appropriate)1 and to the limitations contained in CREDS 3.2.2 R and CREDS 3.2.3 R, a credit union may invest its surplus funds and funds serving liquidity purposes only in the following types of investment:
fixed-interest sterling-denominated securities guaranteed by the government of any EEA State, provided that any guarantee is unconditional in respect of the payment of both principal and interest on those securities.
Where under CREDS 3.2.1 R to CREDS 3.2.3 R above, a firm or another institution ceases to satisfy the conditions necessary for a credit union to invest with it or lend to it, and any funds of a credit union are with that firm or other institution, the credit union must take all practicable steps to call in and realise that investment or loan within three months of that cessation, or, if that is not possible, as soon after the end of that period as possible.
CREDS 7 (Lending) (which covers loans to members) does not apply to loans between credit unions (see CREDS 7.1.1 R). However, in relation to those loans, credit unions should have regard to the principles outlined in CREDS 7.4.6 G and CREDS 7.5 (Provisioning).
CREDS 6.3.4 R (2) applies to loans between credit unions in relation to liquidity.