CRED 10.3 Lending limits
Subject to CRED 10.3.6 R, a version 1 credit union must not lend for a period of more than three years where unsecured and seven years where secured.1
A version 1 credit union must not lend more than £10,000 in excess of the borrowing member's shareholding. A credit union must maintain a capital to total assets ratio of at least 5% when making a loan to any member of an amount greater than £5,000 in excess of that member's shareholding.
Subject to CRED 10.3.6 R, a version 2 credit union must not lend for a period of more than five years where unsecured and fifteen years where secured.1
The maximum amount that a version 2 credit union may lend is £10,000 in excess of the borrowing member's shareholding or 1.5% of total shares in the credit union in excess of the borrowing member's shareholding, whichever is the greater.
The lending limit requirements set out above are maxima. A credit union should have adequate systems for recording and controlling all potential exposures. The capital requirements for version 1 credit unions and version 2 credit unions in respect of lending are set out in CRED 8.3CRED 8.4, including the FSA's requirements in respect of calculating risk-adjusted capital.
1A credit union with permission for entering into a regulated mortgage contract must not enter into such a contract for a term of more than 25 years.