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  2. Point in time
    2011-02-10

CRED 7A.3 Deposits1

CRED 7A.3.1R
  1. (1)

    A credit union must not accept deposits except:1

    1. (a)

      as shares from its members who are natural persons qualifying in accordance with CRED 13 Annex 2 G Table 1G 1; or1

    2. (b)

      from natural persons too young to be members under CRED 7A.3.1 R(2); or1

    3. (c)

      as loans from persons under CRED 7.3.1A R - CRED 7.3.2A R.1

  2. (2)

    A credit union must not accept deposits exceeding the greater of £10,000 or3 1.5 per cent of the total shareholdings in the credit union from a person who is under the age at which, under section 20 of the Industrial and Provident Societies Act 1965, he may become a member of the credit union unless the deposits are held in a CTF, in which case the credit union may accept a larger deposit.21

    3
CRED 7A.3.1AG

2Credit unions that provide CTFs should ensure that under their rules depositors under the age of 18 whose deposits are held within a CTF continue to be treated as juvenile depositors until the age of 18. This will provide for the fact that CTF account holders may not withdraw any money from the CTF until they reach the age of 18 in contrast to the position in relation to other deposits which become shares and may be withdrawn earlier.

CRED 7A.3.2G
  1. (1)

    The effect of the general prohibition in section 19 of the Act is that no person may carry on the regulated activity of accepting deposits, unless authorised or exempt.1

  2. (2)

    CRED 7.3.1A R and CRED 7A.3.1 R are intended to ensure that the liberalisation of credit union borrowing (CRED 7.3.2A R) does not have the unintended effect of undermining the common bond concept (CRED 13 Annex 1 G) by allowing credit unions to operate deposit accounts for natural persons who do not qualify for membership.1

  3. (3)

    Section 20 of the Industrial and Provident Societies Act 1965 provides that a person above the age of 16 may be member of a credit union, unless its rules provide to the contrary (see CRED 13 Annex 2 G Table1G3).1

  4. (4)

    CRED 13 Annex 2 G Table 1G 3 gives guidance on the eligibility of natural persons too young to be members.1

  5. (5)
    1. (a)

      A credit union is no longer required to:1

      1. (i)

        hold such juvenile deposits in a fund apart from the general funds of the credit union; and1

      2. (ii)

        distribute all the interest earned on the fund (after deduction of expenses) to juvenile depositors.1

    2. (b)

      A credit union may make a commercial judgement on the appropriate amount of interest to pay juvenile depositors.1

    3. (c)

      These changes were made by amendment of section 9 of the Credit Unions Act 1979 by Order under section 428 of the Act. (The Financial Services and Markets Act 2000 (Consequential Amendments and Transitional Provisions) (Credit Unions) Order 2002 - SI 2002 No. 1501)1