Related provisions for SUP 10C.15.9
1 - 20 of 65 items.
SYSC 4.1.1 R requires every firm, including a credit union, to have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks it is or might be exposed to, and internal control mechanisms, including sound administrative and accounting procedures and effective control and safeguard arrangements for information processing
For credit unions, the arrangements, processes and mechanisms referred to in SYSC 4.1.1 R should be comprehensive and proportionate to the nature, scale, and complexity of the risks inherent in the business model and3 of the credit union's activities. That is the effect of SYSC 4.1.2 R and SYSC 4.1.2A G.
A credit union’s systems and controls should be proportionate to the nature, scale and complexity of the activities it undertakes. For instance, a 5small credit union5 will not usually 5be expected to have the same systems and controls as a large one, and a credit union offering only basic savings accounts and loans will not be expected to have the same systems and controls as one offering a wider range of services or more complicated products5.
Under section 4(1) of, and Schedule 1 to, the Credit Unions Act 1979 or article 8(1) of, and Schedule 1 to, the Credit Unions (Northern Ireland) Order 1985, as appropriate1, a credit union is required to have a committee of management, managers or other officers, or a board of directors (a governing body)5. This body 5should be competent to control the affairs of a credit union, and have an appropriate range of skills and experience relevant to the activities carried on by the
In accordance with rule SC 2 in COCON 2.2.1R5, it is the responsibility of each individual member of the governing body5 who is a senior conduct rules staff member5to understand, and ensure that the credit union complies with, the requirements of all the relevant Acts, secondary legislation and rules.
(1) The 5credit union'sgoverning body5has responsibility for ensuring that the credit union complies with the requirements of SYSC 4.1.1 R (see CREDS 2.2.1 G and CREDS 2.2.2 G). So, the governing body5 has overall responsibility for:(a) establishing objectives and formulating a business plan;(b) monitoring the financial position of the credit union;(c) determining and documenting policies and procedures;(d) directing and coordinating the work of all employees and volunteers, and
Responsibilities of connected persons (for example, relatives and other close relationships) should be kept entirely separate. They should not hold key posts at the same time as each other. Where this is unavoidable, a credit union should have a written policy for ensuring complete segregation of duties and responsibilities.
CREDS 2.2.8 R requires a credit union's system of control to be fully documented. The documentation helps the governing body5 to assess if systems are maintained and controls are operating effectively. It also helps those reviewing the systems to verify that the controls in place are those that have been authorised, and that they are adequate for their purpose.
(1) The governing body5 should decide what form this documentation should take, but the governing body5 should have in mind the following points.(a) Documents should be comprehensive: they should cover all material aspects of the operations of the credit union.(b) Documents should be integrated: separate elements of the system should be cross-referred so that the system can be viewed as a whole.(c) Documents should identify risks and the controls established to manage those risks.
SYSC 9.1.1 R requires that a credit union takes reasonable care to make and retain adequate records of all matters governed by the Act or the CCA, 4 secondary legislation under the Act or the CCA, 4 or rules (including accounting records). These records should be capable of being reproduced in the English language and on paper.
The main reasons why a credit union should maintain adequate accounting and other records are:(1) to provide the governing body5 with adequate financial and other information to enable it to conduct its business in a prudent manner on a day-to-day basis;(2) to safeguard the assets of the credit union and the interests of members and persons too young to be members; (3) to assist officers of the credit union to fulfil their regulatory and statutory duties in relation to the preparation
(1) Depending on the nature, scale and complexity of its business, it may be appropriate for a credit union to have a separate compliance function.(2) The organisation and responsibilities of a compliance function should be documented.(3) A compliance function should be staffed by an appropriate number of competent staff who are sufficiently independent to perform their duties objectively. It should be adequately resourced and should have unrestricted access to the credit union's
5The governing body must be satisfied that: (1) the information available is sufficiently comprehensive for the proper assessment of the potential risks for the credit union, and in order to determine its need for capital and liquidity; (2) the information available is sufficiently comprehensive to provide a clear statement of the performance and financial position of the credit union; (3) management information reports are prepared with sufficient frequency;(4) sufficient attention
The purposes of an internal audit are:(1) to ensure that the policies and procedures of the credit union are followed;(2) to provide the governing body5 with a continuous appraisal of the overall effectiveness of the control systems, including proposed changes;(3) to recommend improvements where desirable or necessary;(4) to determine whether the internal controls established by the governing body5 are being maintained properly and operated as laid down in the policy, and comply
The internal audit function (see CREDS 2.2.11G) should develop an audit plan, covering all aspects of the credit union's business. The audit plan should identify the scope and frequency of work to be carried out in each area. Areas identified as higher risk should be covered more frequently. However, over a set timeframe (likely to be one year) all areas should be covered. Care should be taken to avoid obvious patterns in assessing the different areas of the credit union's business,
The internal audit work programme should include items such as:(1) verification of cash (counting and reconciliation) without prior notification;(2) bank reconciliation (checking records against bank statements);(3) verification of passbooks or account statements;(4) checking for compliance with policies and procedures;(5) checking for compliance with relevant Acts, secondary legislation and rules;(6) checking minutes and reports of the governing body5 and other sub-committees
The key elements of a satisfactory system of internal audit include the following:(1) Terms of reference. These should be specified with precision and include, amongst other things, scope and objectives of the audit committee and the internal audit function (see CREDS 2.2.11G), access to records, powers to obtain information and explanations for officers, and reporting requirements. These should be approved by the governing body5. (2) Risk analysis. Key risks in each area of the
The governing body5should consider the range of possible outcomes in relation to various risks. These risks are increased when a credit union provides ancillary services such as issuing and administering means of payment and money transmission, which result, in particular, in higher liquidity and operational risks.
The policy and procedures manual should cover all aspects of the credit union's operations, including matters such as:(1) cash handling and disbursements;(2) collection procedures;(3) lending, (see CREDS 7.1 to CREDS 7.2)5;(4) arrears management (see CREDS 7.2.9 G to CREDS 7.2.10 G);(5) provisioning5;(6) liquidity management5;(7) financial risk management5;(8) money laundering prevention (see SYSC 6.3);(9) internal audit (see CREDS 2.2.40 G to CREDS 2.2.50 G);(10) information
A credit union should put in place contingency arrangements to ensure that it could continue to operate and meet its regulatory requirements in the event of an unforeseen interruption that may otherwise prevent the credit union from operating normally (for example, if there was a complete failure of IT systems or if the premises were destroyed by fire).
(1) SYSC 23 to SYSC 276 have a number of requirements about the governance and senior management arrangements of SMCR firms6. 5(2) A credit union is a type of SMCR firm6.(3) SYSC 23 to SYSC 276 are summarised in CREDS 2.2.66G to CREDS 2.2.70G.(4) The PRA’s requirements about the subjects dealt with in SYSC 23 to SYSC 276 are set out in its Rulebook. CREDS does not summarise them.
(1) SYSC 25 says that certain SMCR firms6, including a credit union, should, at all times, have a comprehensive and up-to-date document that describes their6 management and governance arrangements. This is called the management responsibilities map.5(2) SYSC 25.4.14G6 has guidance on management responsibilities maps for small firms, which is likely to be of particular relevance to credit unions.
65(1) SYSC 24 says that certain SMCR firms, including a credit union, should6 allocate a number of specified management responsibilities (called FCA-prescribed senior management responsibilities) to one or more of their SMF managers6. (2) SYSC 26 says that certain SMCR firms, including a credit union, should6 ensure that, at all times, one or more of their6SMF managers have overall responsibility for each of the activities, business areas and management functions of the firm.
(1) 5The list of FCA-prescribed senior management responsibilities that a credit union should allocate is simpler than for most other SMCR firms who are PRA-authorised persons7.6(2) SYSC 24.2.6R6 sets out a list of FCA-prescribed senior management responsibilities, including the ones that apply to credit unions.
5Under section 63E(1) of the Act, an SMCR firm6 (including a credit union) should take reasonable care to ensure that no employee of the firm performs an FCA certification function6 under an arrangement entered into by the firm in relation to the carrying on by that firm of a regulated activity, unless the employee has a valid certificate issued by that firm to perform the function to which the certificate relates. The definition of employee for these purposes goes beyond a conventional
(1) A credit union must not lend3 to:(a) one of its officers, certification employees2 or approved persons on terms more favourable than those available to other members of the credit union unless: 2(i) that person is a paid employee (other than a director) of the credit union; and (ii) the registered rules of the credit union provide explicitly for the lending3 to paid employees on such terms;(b) (in the case of a Great Britain credit union) 1a relative of, or any person otherwise
(1) To prevent conflicts of interest, a credit union should have clear arrangements for dealing with lending3 to the persons specified in CREDS 7.2.7R.(2) In relation to staff, the prohibition in CREDS 7.2.7 R applies only to those who are officers, certification employees2 or approved persons.2(3) "Connected" in CREDS 7.2.7 R includes any close business or personal relationship.
(1) A credit union may lend3 to a member for a business purpose. However, this does not mean that a credit union may make a loan to a member who merely intends to transmit that loan to another body that will actually carry out the purpose.(2) A credit union should not lend3 to members who are acting together to achieve an aggregate sum of lending3 that exceeds the limits in the lending policy.2
A credit union must provide the FCA, once a year, with a report in the format set out in CREDS 9 Annex 1 R (Credit Union complaints return) which contains (for the relevant reporting period) information about:(1) the total number of complaints received by the credit union;(2) (for the product/service groupings within section 5)3 the number of complaints closed by the credit union:(a) within eight weeks of receipt; and(b) more than eight weeks after receipt;(2A) (for other lending
For the purposes of CREDS 9.2.4 R:(1) a complaint received on any day other than a business day, or after close of business on a business day, may be treated as received on the next business day; and(2) a complaint is resolved where the complainant has indicated acceptance of a response from the credit union, with neither the response nor acceptance having to be in writing.
For the purpose of CREDS 9.2.1 R, and upon completing the return, the credit union should note that:(1) where a complaint could fall into more than one category, the complaint should be recorded against the category that the credit union considers to form the main part of the complaint;(2) where a complaint has been upheld under CREDS 9.2.1R (3)(a), a credit union should report any complaints to which it has given a final response which accepts the complaint and, where appropriate,
For the purposes of making reports under CREDS 9.2.1 R, a closed complaint is a complaint:(1) where the credit union has sent a final response; or(2) where the complainant has positively indicated acceptance of the credit union's earlier response; or(3) where the complainant has failed to revert to the credit union within eight weeks of the credit union's most recent letter.
A report under this section must be given or addressed, and delivered, in the way set out in SUP 16.3.6 R to SUP 16.3.16 G (General provisions on reporting), except that, instead of the credit union's usual supervisory contact, the report must be given to or addressed for the attention of the Central Reporting team at the FCA.22
A credit union must not accept deposits except:(1) 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 or the Credit Union (Northern Ireland) Order 1985 (as appropriate) and the rules of the credit union; or(2) from persons too young to be members under any provision of the credit union’s rules or (for Northern Ireland credit unions) under article 15 of the Credit Unions (Northern Ireland)
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 with the position in relation to other deposits which become shares and may be withdrawn earlier.
CREDS 3A.2.2R and CREDS 3A.3.1R are intended to ensure that the liberalisation of credit union borrowing (CREDS 3A.3.2G) 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.
(1) The effect of section 59 of the Act is that if a person is to perform certain functions (which are known as controlled functions) for a credit union, the credit union should first apply for approval to:2(a) the FCA (if the controlled function is specified by the FCA in its rules); or2(b) the PRA (if the controlled function is specified by the PRA in its rules).2(2) The firm should not allow the person to perform that function until the firm receives the approval.2(3) A person
(1) The controlled functions specified by the FCA for credit unions and other SMCR firms3 can be found in the table in SUP 10C.4.3R.2 The table in SUP 10C Annex 1 3.2R sets out which of them apply to credit unions.311(2) The controlled functions specified by the PRA for credit unions and other SMCR firms3 can be found in the PRA’s Rulebook. They are not summarised in the Handbook.2
5(1) The designated senior management functions cover the top management roles in a firm.2(2) An approved person approved to perform a designated senior management function is called an SMF manager.2(3) [deleted]432(4) All controlled functions in a credit union are designated senior management functions and every approved person in a credit union is also an SMF manager.2
2As well as listing the FCA’sdesignated senior management functions for credit unions and other SMCR firms3, SUP 10C has other requirements about SMF managers:(1) SUP 10C sets out the procedures for applying for, granting, removing and varying approval as an SMF manager.(2) SUP 10C requires firms to give various types of reports to the FCA about their SMF managers.(3) SUP 10C explains that each firm must prepare a statement of responsibilities for each of its SMF managers. A statement
(1) 1The requirements in this section apply:(a) (excluding the requirements in CREDS 3A.5.6R and CREDS 3A.5.7R) to a firm when dealing in or arranging a deal in a deferred share with or for a relevant credit union client where the relevant credit union client is to enter into the deal as buyer; and(b) (excluding the requirements in CREDS 3A.5.3R to CREDS 3A.5.5R) to a firm when:(i) communicating a direct offer financial promotion relating to credit union subordinated debt to a
(1) The firm must:(a) give the relevant credit union client a risk warning in the form in (2) on paper or another durable medium; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has read it, in good time before the relevant credit union client has committed to buy the deferred share.(2) “The investment to which this communication relates is a deferred share. Direct investment in deferred shares can be high risk
(1) The firm must:(a) give the relevant credit union client a statement in the form in (2) on paper or another durable medium; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has signed it,in good time before the relevant credit union client has committed to buy the deferred share.(2) “I make this statement in connection with my proposed investment in deferred shares issued by a credit union. I have been made aware
If the relevant credit union client is not receiving advice that constitutes a regulated activity on the deferred share, the firm must assess whether investment in the deferred share is appropriate for the relevant credit union client, complying with the requirements in COBS 10 as if the firm were providing non-advised investment services in the course of MiFID or equivalent third country business.
(1) The firm must:(a) include a risk warning in the form in (2) for any direct offer financial promotion to a relevant credit union client relating to credit union subordinated debt; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has read the risk warning,in good time before the relevant credit union client makes the subordinated loan to the credit union.(2) “The investment to which this financial promotion relates
(1) The firm must:(a) include a statement in the form in (2) in any direct offer financial promotion to a relevant credit union client relating to credit union subordinated debt; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has signed the statement,in good time before the relevant credit union client makes the subordinated loan to the credit union.(2) “I make this statement in connection with my proposed making
(1) Where a firm applies any exemption set out in COBS 22.2.4R under CREDS 3A.5.1R(3)2, any reference in COBS 22.2.4R to mutual society share must be read as though it includes a deferred share or credit union subordinated debt, as applicable.(2) For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, as applied for the purposes of this section under CREDS 3A.5.1R(3)2, any reference in COBS 4.12B3 provisions to non-mass market investments3
CREDS sets out rules and guidance that are specific to credit unions. CREDS 10 refers to other more generally applicable provisions of the Handbook that are likely to be relevant to credit unions, including those with other permissions to carry out regulated activities in addition to7Part 4A permission to accept deposits. For details of these provisions, we would expect credit unions to access the full text in the Handbook.
(1) This chapter is also intended to remind credit unions that the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) also contains a number of high level rules and guidance relating to senior management arrangements, systems and controls designed to have general application to all firms, including credit unions. Subject to the exceptions in (2) and (3) below, SYSC 1, SYSC 4 to SYSC 10 and SYSC 21 apply to all credit unions in respect of the carrying on of
The purposes of SYSC, which applies to all credit unions, are:(1) to encourage directors and senior managers to take appropriate practical responsibility for the arrangements that all firms must put in place on matters likely to be of interest to the FCA2 because they impinge on the FCA’s functions2 function under the Act;(2) to reinforce Principle 3, under which all firms must take reasonable care to organise and control their affairs responsibly and effectively with adequate
(1) A firm other than firm in (2)7 must submit a document in column 1 of the table in SUP 10C.15.10R, in accordance with the corresponding requirement in column two of that table.(2) A:7(a) 7credit union; or(b) 7a firm whose Part 4A permission covers only credit-related
regulated activities;must submit a document in column 1 of the table in SUP
10C.15.10R, in accordance with the corresponding requirement
in column three of that table.(3) This direction applies to the forms and
Table: Method of submission
1Form or other document |
Firms that are not credit unions or consumer credit firms (SUP 10C.15.7D(1))7 |
Credit unions and consumer credit firms (SUP 10C.15.7D(2))7 |
The relevant Form A |
||
Form B |
||
Form C |
||
Form D |
||
Form E |
||
Form I |
||
Form J |
||
Relevant statement of responsibilities2 |
In accordance with the requirements for the form with which it is submitted |
In accordance with the requirements for the form with which it is submitted |
4MiFID Article 4 SMR Information Form |
Submit at the same time as Form A and/or E |
Not applicable |
Submit at the same time as Form A, C and/or E |
Not applicable |
Every credit union must make available, free of charge, to every member or person interested in the funds of the credit union who applies for it, a copy of the latest annual return4 of the credit union and auditor’s report for that year4 sent to the FCA under section 89 of the Co-operative and Community Benefit Societies Act 20144.
(1) A firm must make any notifications required pursuant to section 64C of the Act relating to conduct rules staff other than SMF managers4in accordance with SUP 15.11.13R to SUP 15.11.15R.3(2) That notification must be made annually.3(3) Each notification must:3(a) cover;63(i) 6(in the case of a firm falling within SYSC 23 Annex 1
6.7R (credit firms with limited permission)) its annual
financial reporting period ending on its accounting
reference date; or(ii) 6(for any other
(1) A firm other than a credit union must make each notification pursuant to SUP 15.11.13R (notifications about section 64C of the Act relating to conduct rules staff other than SMF managers4) by submitting it online through the FCA’s website using the electronic system made available by the FCA for this purpose.3(2) A firm must use the version of Form H (named REP008 – Notification of Disciplinary Action) 4made available on the electronic system referred to in (1), which is based
(1) 1340In this sourcebook, the term electronic money issuer does not include credit institutions, credit unions or municipal banks (which will be carrying on a regulated activity if they issue electronic money and will be covered by this sourcebook as firms in those circumstances), but it does include small electronic money institutions and persons who meet the conditions set out in regulation 75(1) or regulation 76(1) of the Electronic Money Regulations.(2) [deleted]24
The capital resources requirement for a firm (other than a credit union) carrying on regulated activities, including designated investment business and to which IPRU(INV) does not apply5, is the higher of:(1) the requirement which is applied by this chapter according to the activity or activities of the firm (treating the relevant rules as applying to the firm by disregarding its designated investment business); and(2) the financial resources requirement which is applied by the
Electronic money is specified as an investment in article 74A of the Regulated Activities Order, but only when issued by:77(1) a full credit institution, a credit union or a municipal bank; or(2) a person deemed to have been granted authorisation under regulation 74 of the Electronic Money Regulations; or a person who falls within regulation 76(1) of the Electronic Money Regulations (see PERG 3A, Q30 and 31).The authorisation and registration requirements for any other person
Shares are defined in the Regulated Activities Order as shares or stock in a wide range of entities; that is, any body corporate wherever incorporated and unincorporated bodies formed under the law of a country other than the United Kingdom. They include deferred shares issued by building societies as well as transferable shares in industrial and provident societies, credit unions and equivalent EEA bodies. These shares are transferable and negotiable in a way similar to other
The following are excluded from the specified investment category of shares. Shares or stock in all open-ended investment companies are excluded from being treated in this particular category (but see PERG 2.6.17 G). Exclusions from this category also apply to shares or stock in the share capital of certain mutuals or in equivalent EEA bodies. This takes out building society or credit union accounts and non-transferable shares in industrial and provident societies. These may nevertheless
In accordance with article 61(3)(a) of the Regulated Activities Order, a regulated mortgage contract is a contract which, at the time it is entered into, satisfies the following conditions:(1) the contract is one where the lender provides credit to an individual or trustees (the "borrower");(2) the obligation of the borrower to repay is secured by a mortgage on land:181212(a) in relation to a contract entered into before IP completion day19, means land in the United Kingdom or,