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Status: You are viewing the version of the handbook as on 2012-12-13.

CREDS 7.3 Lending limits

CREDS 7.3.1R

Subject to CREDS 7.3.8 R, a version 1 credit union must not lend for a period of more than five years where unsecured and ten years where secured.

[Note: a transitional provision applies to this rule: see .]1

CREDS 7.3.2R

The outstanding balance of a loan by a version 1 credit union to a member must not at any time be more than £15,000 in excess of the attached shares held by that member, but this rule is subject to the additional requirement in CREDS 5.3.10 R (1).

CREDS 7.3.3G

The effect of CREDS 5.3.10 R (1) is to prevent a version 1 credit union from lending more than £7,500 in excess of the attached shares held by that member unless it has a capital-to-total assets ratio of at least 5%.

CREDS 7.3.4R

Subject to CREDS 7.3.8 R, a version 2 credit union must not lend for a period of more than ten years where unsecured and 25 years where secured.

[Note: a transitional provision applies to this rule: see .]1

CREDS 7.3.6R

The outstanding balance of a loan by a version 2 credit union to a member must not at any time be more than:

  1. (1)

    £15,000 in excess of the attached shares held by that member; or

  2. (2)

    an amount equivalent to 1.5% of total non-deferred shares in the credit union in excess of the attached shares held by that member;

whichever is the greater.

CREDS 7.3.7G

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 CREDS 5.3 and CREDS 5.4, including the FSA's requirements in respect of calculating risk-adjusted capital.

CREDS 7.3.8R

A 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.