CREDS 7.3 Lending limits
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.
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).
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%.
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.
The outstanding balance of a loan by a version 2 credit union to a member must not at any time be more than:
- (1)
£15,000 in excess of the attached shares held by that member; or
- (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.
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 PRA's requirements in respect of calculating risk-adjusted capital.
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.