Prudential Regulation Authority Rulebook

2.1

For the purposes of this Chapter, in relation to a joint account:

1. (1) the shares attributable to a member must be treated by a credit union as the amount arrived at by dividing the balance in the joint account by the number of members with an interest in that account; and
2. (2) the juvenile deposits attributable to an individual must be treated by a credit union as the amount arrived at by dividing the balance in the joint account by the number of juvenile depositors with an interest in that account.

2.2

Subject to 2.3 and 2.4, a credit union must ensure that a member does not have non-deferred shares in the credit union which in aggregate exceed the greater of:

1. (1) £15,000; and
2. (2) 1.5% of total non-deferred shares in the credit union;

2.3

In the event that 1.5% of total non-deferred shares in the credit union exceeds the FSCS compensation sum, a credit union must notify the PRA in writing at least five business days prior to issuing non-deferred shares that exceed the FSCS compensation sum.

2.4

In the event of an increase in the percentage of non-deferred shares held by a member as a result of a reduction in the total non-deferred shares occurring after the time at which that member last acquired non-deferred shares in the credit union that would, but for this rule, result in a breach of the limits in 2.2:

1. (1) the increase in the percentage of the non-deferred shares held by that member is disregarded for the purposes of the limits in 2.2; and
2. (2) the credit union must not accept subscriptions from that member.

2.5

A credit union must not:

1. (1) pay different dividends on different accounts unless:
1. (a) at the time of the payment of any dividends it has a capital-to-total assets ratio of at least 5%; and
2. (b) the payment of any of those dividends does not reduce the capital-to-total assets ratio to below 5%; or
2. (2) pay dividends out of interim profits more than once a year unless it has capital of at least 8% of total assets and, other than in a stress scenario in which case such buffer may be employed to absorb losses, a capital buffer at least equal to a further 2% of total assets.

2.6

Subject to 2.7 and 2.8, a credit union must ensure that an individual does not have juvenile deposits which in aggregate exceed the greater of:

1. (1) £10,000; and
2. (2) 1.5% of the total non-deferred shares in the credit union.

2.7

In the event that 1.5% of total non-deferred shares in a credit union exceeds the FSCS compensation sum, the credit union must notify the PRA in writing at least five business days prior to accepting juvenile deposits that exceed the FSCS compensation sum.

2.8

In the event of an increase in an individual’s juvenile deposits expressed as a percentage of total non-deferred shares as a result of a reduction in the total non-deferred shares in the credit union occurring after the time at which that individual last made a deposit in the credit union that would, but for this rule, result in a breach of the requirement in 2.6:

1. (1) the increase in juvenile deposits expressed as a percentage of the total non-deferred shares held by that individual is disregarded for the purposes of the requirement in 2.6; and
2. (2) the credit union must not accept deposits from that individual.

2.9

A credit union must at all times maintain in force a policy of insurance that complies with the requirements in 2.10.

2.10

A policy of insurance must, subject to the exception in 2.11:

1. (1) 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. (2) insure the credit union up to the limits set out in 2.12 in respect of any one claim, except that the liability of the insurer may be restricted to the amounts set out in 2.12 in respect of the total of the claims made in any one year; and
3. (3) not, in relation to a claim, provide for an amount greater than 1% of the limits on any one claim set out in 2.12, to be met by the credit union.

2.11

From the losses and liabilities against which a policy that complies with the requirements of 2.10 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.

2.12

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 chapter, 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 these purposes, "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.