CREDS 4
Shares and deposits
CREDS 4.1
Application and purpose
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Application
CREDS 4.1.1
See Notes
This chapter applies to all credit unions.
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Purpose
CREDS 4.1.2
See Notes
The
purpose of this chapter is to provide for limits on holdings of shares and
deposits, joint accounts, dividends and insurance cover (based on the aggregate
value of shares and deposits).
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CREDS 4.2
Shares
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Maximum shareholdings
CREDS 4.2.1
See Notes
(1) A
Great Britain credit union
must not permit a member to have
or claim any interest in the sharesof the
Great
Britain credit union, other than deferred
shares, exceeding the greater of:
(a) £10,000; or
(2) A Northern Ireland credit union must
not permit a member to have or claim any interest in the shares of the Northern Ireland credit union exceeding
the greater of:
(a) £15,000;
or
(b) 1.5 per cent
of the total shares in the Northern
Ireland credit union.
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CREDS 4.2.2
See Notes
Where:
(1) there is an increase in the percentage
of the total non-deferred shares in
the credit union held by a member;
and
(2) 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.- 08/01/2012
CREDS 4.2.3
See Notes
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.
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Joint accounts
CREDS 4.2.4
See Notes
Shares in a
Great Britain credit union
must not be held in the joint names
of more than two members.
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CREDS 4.2.4A
See Notes
There
is no restriction on the number of members who may jointly hold shares in
a Northern Ireland credit
union.
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CREDS 4.2.5
See Notes
(1) For the purpose only of the limitin CREDS 4.2.1R (1), the interest
of a member in a joint account must be treated as 50 per cent of the shareholding
in that account.
(2) For the purpose
only of the limit in CREDS 4.2.1R
(2), the interest of a member in a joint account must
be treated as the percentage represented by that individual member as a percentage
of the total number of members holding an interest in the joint account.
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Dividends on shares
CREDS 4.2.6
See Notes
A version
1 credit union must not:
(1) pay different dividends on different
accounts unless:
(a) at the time of the payment of any
dividends it has a capital-to-total assets ratio of at least 5%; and
(b) the payment of any of those dividends
does not reduce the capital-to-total assets ratio to below 5%; or
(2) pay dividends out of interim profits
more than once a year.
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CREDS 4.2.7
See Notes
A version
2 credit union is permitted to:
(1) pay different dividends on different
accounts; and
(2) pay dividends out of interim profits
more than once a year.
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CREDS 4.3
Deposits
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CREDS 4.3.1
See Notes
(1) A credit
union must not accept deposits except:
(a) 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
(b) from persons too
young to be members under (2); or
(2) 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 (for Great
Britain credit unions) any provision of the credit union's rules, (for Northern Ireland credit
unions) under article 15 of the Credit Unions (Northern Ireland)
Order 1985 or 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.
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CREDS 4.3.2
See Notes
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.
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CREDS 4.3.3
See Notes
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.
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CREDS 4.4
Insurance against fraud or other dishonesty
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CREDS 4.4.1
See Notes
A credit union must at all times maintain in
force a policy of insurance complying with CREDS 4.4.2 R.
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CREDS 4.4.2
See Notes
In order
to comply with CREDS 4.4.1 R, a policy of insurance (subject to the exception
in CREDS 4.4.3 R):
(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) 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
(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 CREDS
4 Annex 1 R to be met by the credit
union.
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CREDS 4.4.3
See Notes
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.
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CREDS 4.4.4
See Notes
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).
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CREDS 4.4.5
See Notes
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:
(1) is needed for its own particular
circumstances; and
(2) 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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CREDS 4 Annex 1
Insurance against fraud or other dishonesty (see CREDS 4.4.1R)
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See Notes
|
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 | |
| 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 |
| 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 |
| 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 |
| 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 |
| 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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