The FSA and HMT have today published a joint consultation paper setting out proposals for the transfer of the regulation of NI credit unions from the NI DETI to the FSA, bringing enhanced consumer protection to the 177 NI credit unions and their members.
The transfer is due to take place on 31 March 2012.
As part of this process the joint consultation paper outlines proposed legislative amendments and FSA rules that will apply to all NI credit unions. These changes will lead to a number of benefits for these credit unions and their members. In particular:
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NI credit unions will come within the UK Financial Services Compensation Scheme (FSCS) and within the compulsory jurisdiction of the Financial Ombudsman Service (the ombudsman service).
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This will significantly enhance consumer protection as only some, but not all, NI credit unions are currently covered, to varying levels, by voluntary protection schemes operated by the relevant trade associations.
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Prudential standards for NI credit unions will be aligned to those of other credit unions in Great Britain with a focus particularly on capital, liquidity and financial reporting .
Martin Stewart, the FSA's head of building societies and credit unions, said:
"We have been working closely with HMT and DETI on the legislative and regulatory amendments necessary to transfer the regulation of NI credit unions to our remit. This will finally bring NI credit unions in line with other credit unions in Great Britain and will result in beneficial changes for these credit unions and their members. One of the main benefits will be that, for the first time, members will have greater consumer protection with cover from the FSCS and the ombudsman service.
"Over the next few months we will be engaging with NI credit unions and other stakeholders to encourage them to provide us and HMT with their views and suggestions so we can ensure the transfer process is as smooth as possible."
The joint consultation paper proposes that from March 2012 NI credit unions will need to comply with an updated version of the Credit Union Sourcebook that currently applies to all credit unions in Great Britain. This sets out, in one place, the prudential and reporting requirements specific to credit unions. The requirements will be proportionate to different levels of risk dependent on the type of activity the credit union undertakes.
The consultation paper is open for feedback until 31 October 2011.
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