A credit union must not permit a member to have or claim any interest in the shares of the credit union, other than deferred shares, exceeding the greater of:
£10,000; or
1.5 per cent of the total non-deferred shares in the credit union.
Where:
there is an increase in the percentage of the total non-deferred shares in the credit union held by a member; and
this is the result of a reduction in the total non-deferred shares in the credit union occurring after the time at which that member last acquired shares, or an interest in the shares, of the credit union, other than deferred shares;
that increase in the percentage of the total non-deferred shares in the credit union held by that member must be disregarded for the purposes of the limits in CREDS 4.2.1 R (2) and CREDS 4.2.5 R.
CREDS 4.2.2 R makes it unnecessary for a member to reduce his shareholding merely because of a reduction in the total non-deferred shares in the credit union.
For the purpose only of the limit in CREDS 4.2.1 R, the interest of a member in a joint account must be treated as 50 per cent of the shareholding in that account.
A credit union must not accept deposits except:
by way of subscription for its shares from persons who may lawfully be admitted to membership of the credit union under the Credit Unions Act 1979 and the rules of the credit union; or
from persons too young to be members under (2); or
as loans from persons under CREDS 3.3.1 R to CREDS 3.3.2 G.
A credit union must not accept deposits exceeding the greater of £10,000 or 1.5 per cent of the total non-deferred shares in the credit union from a person who is under the age at which, by virtue of any provision of the credit union's rules or otherwise, he may lawfully 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.
Credit 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they reach the age of 18, in contrast to the position in relation to other deposits which become shares and may be withdrawn earlier.
CREDS 3.3.1 R and CREDS 4.3.1 R are intended to ensure that the liberalisation of credit union borrowing (CREDS 3.3.2 G) does not have the unintended effect of undermining the common bond concept by allowing credit unions to operate deposit accounts for natural persons who do not qualify for membership.
A credit union must at all times maintain in force a policy of insurance complying with CREDS 4.4.2 R.
In order to comply with CREDS 4.4.1 R, a policy of insurance (subject to the exception in CREDS 4.4.3 R):
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;
must so insure the credit union up to the limits set out in CREDS 4 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 CREDS 4 Annex 1 R in respect of the total of the claims made in any one year; and
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 CREDS 4 Annex 1 R to be met by the credit union.
From the losses and liabilities against which a policy complying with CREDS 4.4.2 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.
The "aggregate value" in CREDS 4 Annex 1 R comprises the shares and deposits (including those held in a CTF) referred to in CREDS 4.3.1 R (1)(a) and (b).
The tables in CREDS 4 Annex 1 R set out the minimum levels of insurance cover required by a credit union. It is prudent for a credit union to consider whether additional cover:
is needed for its own particular circumstances; and
should be obtained to cater for actual or projected growth in the "aggregate value" (see paragraph 1 of CREDS 4 Annex 1 R) between "relevant dates" (see paragraph 3 of CREDS 4 Annex 1 R).
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Column (1) Aggregate value of share subscriptions and other deposits received and not repaid (the "aggregate value") |
Column (2) Cover required in respect of any one claim |
Column (3) Cover required in respect of total claims made in any one year |
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Row (A) |
Less than £10,000 |
The higher of £500 or 50 per cent of the aggregate value |
The higher of £1,000 or 100 per cent of the aggregate value |
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Row (B) |
£10,000 to £100,000 |
The higher of £5,000 or 20 per cent of the aggregate value |
100 per cent of the aggregate value |
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Row (C) |
More than £100,000 |
The higher of £20,000 or 15 per cent of the aggregate value |
The higher of £100,000 or 75 per cent of the aggregate value |
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Row (D) |
More than £1,000,000 |
£150,000 plus 5 per cent of the aggregate value over £1,000,000, subject to a maximum of £2,000,000 |
£750,000 plus 5 per cent of the aggregate value over £1,000,000, subject to a maximum of £4,000,000 |
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Notes: (1) In relation to a credit union which, at the relevant date, has accepted and not repaid share subscriptions and other deposits of the aggregate value stipulated in column (1) of the table in this Annex, the limit in respect of any one claim is the amount appearing in the corresponding part of column (2); and the amount in respect of the total of claims made in any one year is the amount appearing in the corresponding part of column (3). (2) For the purposes of this Annex, "the relevant date" is either the date of inception or renewal of the policy of insurance, or such other date as the credit union determines, provided that the relevant date in each year subsequent to the first must be not more than one year after the relevant date in the preceding year. |
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