1This chapter applies to all credit unions.

A credit union must not permit a member to have or claim any interest in the shares of the credit union exceeding the greater of £5,000 and 1.5 per cent of the total shareholdings in the credit union.

Where CRED 7A.2.1 R or CRED 7A.2.6 R would be breached in relation to a member of a credit union because of a reduction in the total shareholdings in the credit union, those rules must, in relation to him, have effect, as respects any shares which he had, or interest which he claimed, immediately before the reduction, as if there were added at the end "at the time, or latest time, when he acquired shares, or an interest in the shares of the credit union."

For the purposes of CRED 7A.2.1 R and CRED 7A.2.2 R, the total shareholdings in a credit union at any time must be taken to be the total shareholdings as shown in the most recent annual return to have been sent to the FSA under SUP 16.7.62 (see CRED 14.10.7 G).

Shares in a credit union must not be held in the joint names of more than two members.

For the purpose only of the limit in CRED 7A.2.1 R, the interest of a member in a joint account must be treated as 50 per cent of the shareholding in that account.

A version 1 credit union must not:

1. (1)

   pay different dividends on different accounts; and

2. (2)

   pay dividends out of interim profits more than once a year.

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 £5,000 and 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

A credit union must at all times maintain in force a policy of insurance complying with CRED 7A.4.2 R.

In order to comply with CRED 7A.4.1 R, a policy of insurance subject to the exception in CRED 7A.4.3 R:

1. (1)

   must insure the credit union in respect of every description of loss suffered or liability incurred by reason of the fraud or other dishonesty of any of its officers or employees;

2. (2)

   must so insure the credit union up to the limits set out in CRED 7A Annex 1 R in respect of any one claim, except that the liability of the insurer may be restricted to the amounts set out in CRED 7A Annex 1 R in respect of the total of the claims made in any one year; and

3. (3)

   must not provide in relation to any claim for any amount greater than one per cent of the limits on any one claim set out in CRED 7A Annex 1 R to be met by the credit union.

From the losses and liabilities against which a policy complying with CRED 7A.4.2 R must insure there must be excepted all loss suffered or liability incurred by a credit union other than direct pecuniary loss discovered during the currency of the policy of insurance or within 18 months of the date on which either the policy of insurance lapses, or the duties of the officer or employee concerned are terminated, whichever occurs first.