News
FSA unveils tougher prudential standards for credit unions
23 July 2010 at 15:52
The Financial Services Authority (FSA) has published its near final-rules to strengthen the resilience of the credit union sector and reduce the number of failures.
These will be contained in a new Credit Union sourcebook (CREDS), which will replace the existing sourcebook CRED.
On average, around six credit unions are declared in default each year with customers compensated by the Financial Services Compensation Scheme, and the new rules aim to improve the financial soundness of credit unions and maintain consumer choice in the sector, the regulator states.
The new rules will aim to raise prudential standards, with the main changes including requiring credit unions to have adequate initial capital, the amount of which will be dependent on the nature, scale and complexity of their business.
"In most cases, smaller credit unions will need to have initial capital of at least £10,000 and larger credit unions at least £50,000," the FSA said.
The capital-to-assets and liquidity requirements will be phased in and into full effect on September 30th 2013.
Last week, the FSA published new mortgage compliance proposals designed to guarantee responsible lending, with the key aims of the plans to introduce affordability tests in relation to all mortgages, as well as verification of the salary of borrowers in every case to prevent both fraud and inflation of income.
Posted Claire Robin 