CRED 14.9 Notifications to the FSA

This section and SUP 15 apply to all credit unions in relation to both regulated activities and unregulated activities.

This section is a summary of SUP 15, which sets out:

1. (1)

   guidance on the type of event or change in condition which a credit union should consider notifying to the FSA;

2. (2)

   rules on events and changes that a credit union must notify;

3. (3)

   rules on the core information that a credit union must provide;

4. (4)

   rules requiring a credit union to ensure that information provided to the FSA is accurate and complete.

SUP 15.3.1 R states that a credit union must notify the FSA immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

1. (1)

   the credit union failing to satisfy one or more of the threshold conditions; or

2. (2)

   any matter which could have a serious adverse impact on the credit union's reputation; or

3. (3)

   any matter which could affect the credit union's ability to continue to provide adequate services to its members and which could result in serious detriment to a member; or

4. (4)

   any matter in respect of the credit union which could result in serious financial consequences to the UK financial system2 or to other firms.

   2

Principle 11 requires a credit union to deal with the FSA in an open and cooperative way and to disclose what the FSA would normally expect to be disclosed.

Compliance with Principle 11 includes giving notice of:

1. (1)

   any proposed restructuring, reorganisation or expansion which would have a significant impact on the risks run by the credit union;

2. (2)

   any significant failure in the credit union's systems or controls, including those reported by the credit union's auditor;

3. (3)

   any proposed action that could result in a material change to a credit union's capital adequacy or solvency.

The period of notice given depends on the event, although the FSA expects a credit union to discuss relevant matters with it at an early stage before making commitments.

SUP 15.3.11 R states that a credit union must notify the FSA of the following immediately:

1. (1)

   a significant breach of rule or Principle;

2. (2)

   breach of requirement imposed by the Act, regulations or order;

3. (3)

   the bringing of a prosecution for, or a conviction of, any offence under the Act involving the credit union, members of its committee of management, officers, employees or approved persons.

SUP 15.3.15 R states that a credit union must also notify the FSA immediately of the following:

1. (1)

   civil proceedings against the credit union where the claim is significant to its resources or reputation;

2. (2)

   action against the credit union under section 71 or 150 of the Act (actions for damages);

3. (3)

   the credit union is prosecuted for, or convicted of, any offence involving fraud or dishonesty or any penalties are imposed upon it for tax evasion.

Notification should include details of the matter and an estimate of the likely financial consequences.

SUP 15.3.17 R states that a credit union must notify the FSA immediately of the following events, if significant:

1. (1)

   fraud by an officer against members;

2. (2)

   fraud committed against the credit union;

3. (3)

   irregularities in accounting or other records;

4. (4)

   serious misconduct by officers concerning honesty or integrity.

In determining whether a matter is significant, a credit union should have regard to:

1. (1)

   the size of any monetary loss;

2. (2)

   reputational loss to the credit union;

3. (3)

   weaknesses in the credit union's internal controls.

SUP 15.3.21 R states that a credit union must notify the FSA of any legal steps involving the insolvency, bankruptcy or winding up of the credit union.

SUP 15.5.1 R, SUP 15.5.4 R and SUP 15.5.6 G state that a credit union must provide the FSA with notice of:

1. (1)

   change in name;

2. (2)

   change in address;

3. (3)

   change in legal structure.

Similar obligations to those in CRED 14.9.13 G are imposed by existing credit union legislation.

SUP 15.6.1 R states that a credit union must take reasonable steps to make sure that information given to the FSA is factually accurate and complete.

SUP 15.6.4 R states that a credit union must notify the FSA if it realises that information already provided may be false, misleading, incomplete or inaccurate.

SUP 15.6.7 G states that it is an offence to provide such information knowingly or recklessly.

SUP 15.7.1 R states that a credit union should provide notification in written English, preceded by oral notification if the matter is urgent or significant.

SUP 15.7.4 R and SUP 15.7.5 R state that the notification should be addressed to the credit union's usual supervisory contact at the FSA using one of these methods:

1. (1)

   by post to the FSA's address;

2. (2)

   self delivery to FSA's address (and obtaining a dated receipt);1

3. (3)

   electronic mail to an address for the credit union's usual supervisory contact at the FSA and obtaining an electronic confirmation of receipt;1

4. (4)

   hand delivery to the credit union's usual supervisory contact at the FSA;

5. (5)

   fax number to the credit union's usual supervisory contact at the FSA, followed by submission by one of the methods in CRED 14.9.19 G (1) - CRED 14.9.19 G (4).

SUP 15.7.10 R states that notification should be within the period specified by the particular rule. If no period is specified, the credit union should act reasonably in deciding when to notify.