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 five2 years where unsecured and ten2 years where secured.1
22A version 1 credit union must not lend more than £15,0002 in excess of the borrowing member's shareholding, but this rule is subject to the additional requirement in CRED 8.3.12 R (1).2
222The effect of CRED 8.3.12 R (1) is to prevent a version 1 credit union from lending more than £7,500 in excess of the borrowing member's shareholding unless it has a capital to total assets ratio of at least 5%.
Subject to CRED 10.3.6 R, a version 2 credit union must not lend for a period of more than ten2 years where unsecured and 252 years where secured.1
222A credit union should not attempt to evade the limits in CRED 10.3.1 R and CRED 10.3.3 R by making loans in the expectation that they will not be fully repaid by the end of the period, but will be automatically extended or rescheduled.
The maximum amount that a version 2 credit union may lend is £15,0002 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.
22For the purpose of calculating the maximum loan in CRED 10.3.4 R, the credit union may use the amount of total shares as shown in the most recent annual return to have been sent to the FSA under SUP 16.7.62 R or SUP 16.12.5 R3 (see CRED 14.10.7 G) if that is the latest reliable figure available.
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.