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Credit Unions Act 1979

Type Public General Act

Publication 1979-04-04

Last updated 2018-04-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

203

Words in s. 31(2) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 16(3) (with Sch. 5)

204

Words in s. 31(3) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 16(4)(a) (with Sch. 5)

205

Words in s. 31(3) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 16(4)(b) (with Sch. 5)

206

Words in s. 31(4) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 16(5)(a) (with Sch. 5)

207

S. 31(4)(a)-(e) inserted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 16(5)(b) (with Sch. 5)

208

Words in s. 32(1) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 17(2) (with Sch. 5)

209

Words in s. 32(2) substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 17(3) (with Sch. 5)

210

Words in Sch. 1 para. 1 substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 18(2) (with Sch. 5)

211

Sch. 1 para. 11 substituted (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 154, Sch. 4 para. 18(3) (with Sch. 5)

212

Words in s. 32(1)(a) substituted (6.4.2018 immediately after 2016 c. 16 (N.I.), s. 8(2) comes into force) by The Financial Services Act 2012 (Mutual Societies) Order 2018 (S.I. 2018/323), art. 1, Sch. 4 para. 1 (with art. 3)

213

Words in s. 32(1)(b) substituted (6.4.2018 immediately after 2016 c. 16 (N.I.), s. 8(2) comes into force) by The Financial Services Act 2012 (Mutual Societies) Order 2018 (S.I. 2018/323), art. 1, Sch. 4 para. 1 (with art. 3)

9A

(1) A credit union which provides an ancillary service to a member or any other person from whom the credit union has accepted a deposit may charge such fee as it considers appropriate for providing that service.

(2) In this section, “ancillary service” means any service which is ancillary to the activity of accepting a deposit or making a loan, and includes—

(a) the making or receiving of payments, made by way of standing order, direct debit or any other means, as agent for a member or any other person from whom the credit union has accepted a deposit;

(b) issuing and administering means of payment (for example, chequebooks and debit cards);

(d) giving advice on the services specified by paragraphs (a) to (c) above.

Common bonds appropriate to a credit union

Shares.

Short title, commencement and extent.

1A

(1) Under the rules of the society admission to membership must be restricted to persons who fall within one or more common bonds appropriate to a credit union (whether or not any other qualifications for admission to membership are required under the rules).

(2) The common bonds appropriate to a credit union are—

(a) following a particular occupation;

(b) being employed by a particular employer;

(d) being a member of a bona fide organisation or being otherwise associated with other members of the society for a purpose other than that of forming a society to be registered as a credit union;

(e) any other common bond for the time being approved by the FCA.

(3) If the rules of a credit union so provide, a person who is a member of the same household as, and is a relative of, another person who is a member of the credit union and falls directly within a common bond is treated as also falling within that common bond.

(4) For the purposes of this section, a body corporate or a person applying for membership in his capacity as a partner in a partnership or an officer or member of the governing body of an unincorporated association—

(a) falls within the common bond specified in paragraph (a) of subsection (2) if the principal business of the body corporate, partnership or unincorporated association—

(i) requires it to employ or otherwise engage persons who follow that occupation, or

(ii) relates to that occupation in some other way;

(b) falls within the common bond specified in paragraph (b) of that subsection if the body corporate, partnership or unincorporated association—

(i) employs the persons who qualify for membership under that common bond, or

(ii) provides services, or is otherwise related, to that employer;

(c) falls within the common bond specified in paragraph (c) of that subsection if the body corporate, partnership or unincorporated association has a place of business in, or other significant connection with, that locality; and

(d) falls within the common bond specified in paragraph (d) of that subsection if the body corporate, partnership or unincorporated association is a member of a bona fide organisation or otherwise associated with other members of the society for the purpose specified in that paragraph.

(5) The FCA may accept as sufficient evidence that the requirement of this section is met a statutory declaration to that effect given by three members and the secretary of the society.

1B

(1) The requirements of this section must be met where—

(a) the rules of a society provide for one or more common bonds involving a connection with a locality, or

(b) the rules of a society provide for one or more common bonds of such other description as may be specified.

(2) The requirements are—

(a) that the conditions in subsection (3) are met, or

(b) that extraordinary circumstances exist justifying registration of the society as a credit union.

(3) The conditions are—

(a) that the number of potential members of the society does not exceed two million or such higher figure as may be specified; and

(b) that it is reasonably practicable for every potential member to participate in votes of the society, serve on the society’s committee and have access to all the services offered by the society.

(4) The FCA may accept as sufficient evidence that the conditions in subsection (3) are met a statutory declaration to that effect given by three members and the secretary of the society.

(5) In this section “specified” means specified by order made by the Treasury.

Rules.

5A

(1) A credit union may admit bodies corporate as members if its rules so provide.

(2) The number of corporate members of a credit union shall not at any time exceed ten per cent of the total number of members of the credit union or such higher percentage as may be specified.

(3) The number of shares allotted to corporate members of a credit union shall not at any time exceed twenty-five per cent of the total shares allotted to all members of the credit union or such higher percentage as may be specified.

(4) For the purpose of subsection (3) above, the total shares allotted to all members of the credit union shall be that found in the most recent year-end balance sheet submitted to the appropriate authority.

(5) In this section—

(a) “specified” means specified by order made by the Treasury;

(b) “shares” means shares other than deferred shares.

(6) In this Act “corporate member”, in relation to a credit union, means—

(a) a body corporate which is a member of the credit union;

(b) an individual who is a member of the credit union in his capacity as a partner in a partnership; or

(c) an individual who is a member of the credit union in his capacity as an officer or member of the governing body of an unincorporated association.

7A

(1) A credit union may issue interest-bearing shares if—

(a) its rules so provide;

(b) its most recent year end balance sheet shows that it holds reserves of at least £50,000 or five per cent of its total assets, whichever is greater;

(d) it has submitted that balance sheet to the appropriate authority; and

(e) it has submitted to the appropriate authority a report by its auditors (post-dating the balance sheet referred to in paragraph (b) above), stating that in their opinion the credit union satisfies such conditions as are specified by the appropriate authority for the purpose.

(2) A credit union which issues interest-bearing shares must submit to the appropriate authority an annual report by the auditors appointed to audit its accounts and balance sheet fulfilling the requirements of paragraph (e) of subsection (1) above by the date specified by the appropriate authority for the purpose.

(3) A credit union shall convert any interest-bearing shares in issue into shares which are not interest-bearing if—

(a) its rules no longer provide for the issue of interest-bearing shares;

(b) neither its most recent year end balance sheet nor the balance sheet immediately preceding it—

(i) shows that the credit union holds reserves of at least £50,000 or five per cent of its total assets, whichever is greater; or

(ii) has been submitted to the appropriate authority by the date specified; or

(4) The Treasury may by order provide for subsections (1)(b) and (3)(b)(i) above to have effect as if the references to £50,000 and five per cent were references to such other sum or percentage as they think appropriate.

(5) In this section “year end balance sheet” has the same meaning as in section 82 of the 2014 Act .

(6) In this Act “interest-bearing share” means a share issued on terms which entitle the holder to interest but not to a dividend.

Loans to be treated as secured

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31A

(1) In this Act, references to deferred shares are to a class of shares where—

(a) the rights and obligations of the credit union and the member in respect of those shares are set out in a single document, or in a series of documents (“the issue documents”);

(b) each of the issue documents is provided to every applicant for the shares;

(c) one of the issue documents contains a prominent statement to the effect that the shares are deferred shares for the purposes of this Act;

(d) each of the issue documents contains a prominent statement stating whether the shares are, or are not, an investment covered by the Financial Services Compensation Scheme (see section 213 of the Financial Services and Markets Act 2000);

(e) any document evidencing title to the shares contains the statements required by paragraphs (c) and (d) above;

(f) one of the issue documents contains a term which prohibits the repayment of any principal to the shareholder except in Case A or Case B.

(2) Case A is the winding up or dissolution of the credit union in circumstances where all sums due from the credit union to creditors claiming in the winding up or dissolution are paid in full.

(3) Case B is where—

(a) the credit union applies to the appropriate authority for consent to repay principal to the shareholder,

(b) the credit union so applies otherwise than in consequence of a provision in any of the issue documents which requires it to apply, grants it any benefit for applying or imposes a sanction against failure to apply, and

(4) “Creditors” in subsection (2) above includes members holding shares, other than deferred shares, in the credit union, as regards the principal of those shares and any interest or dividend due on them.

(5) On any modification of the definition of “deferred shares” in the Building Societies Act 1986 or an instrument made under that Act, the Treasury may, by order, modify the meaning of deferred shares in this section so as to assimilate it to the modified definition.

Northern Ireland.

4A

The terms of admission to membership of the society, including any special provision for the insurance of members in relation to their shares.

13A

If the issue of interest-bearing shares is permitted, provision for converting such shares into shares which are not interest-bearing to comply with subsection (3) of section 7A above.

Common bonds appropriate to a credit union

Rules.

Shares.

Loans to be treated as secured

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Use of name “credit union", etc.

Cancellation or suspension of registration and petition for winding up.

No conversion of credit union into company, etc.

Northern Ireland.

23A

(1) The Treasury may by regulations amend this Act so as to make provision for credit unions corresponding to any enactment applying to building societies.

(2) The power conferred by subsection (1) may not be exercised so as to modify any of the following provisions of this Act—

(a) sections 1 and 2 (registration as a credit union);

(b) section 3 (use of name “credit union”);

(c) section 8 (general prohibition on deposit-taking), but without prejudice to the power to add exceptions to those in sections 9 and 10 and to modify those sections;

(d) section 21 (amalgamations and transfers of engagements);

(e) section 22 (no conversion of credit union into company, etc. );

(f) section 23 (conversion of company into credit union).

(3) Regulations under subsection (1) may—

(a) confer power to make orders, regulations and other subordinate legislation;

(b) create criminal offences, but only—

(i) in circumstances corresponding to an offence under the enactments relating to building societies, and

(ii) subject to a maximum penalty no greater than is provided for in respect of the corresponding offence;

(4) The Treasury may by regulations make such amendments of enactments as appear to them to be appropriate in consequence of any provision made under subsection (1).

This includes power to make consequential amendments of the provisions listed in subsection (2).

(5) In this section “ enactment ” includes—

(a) an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978 (c. 30),

(b) an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament,

(c) an enactment contained in, or in an instrument made under, Northern Ireland legislation within the meaning of the Interpretation Act 1978, and

(d) an enactment contained in, or in an instrument made under, a Measure or Act of the National Assembly for Wales.

(6) Before making regulations under this section the Treasury must consult such persons as appear to them to be appropriate.

(7) No regulations under this section are to be made unless a draft has been laid before and approved by a resolution of each House of Parliament.

Modifications of requirements as to audit of accounts.

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Northern Ireland.

Further requirements where common bond relates to locality

17A

(1) This section applies where the FCA or PRA has exercised its powers under section 17 in relation to a credit union.

(2) The FCA or PRA may, if it considers it just to do so, direct that the expenses incurred by it in exercising the powers (or any part of those expenses) are to be met—

(a) out of the credit union’s funds, or

(b) by the credit union’s officers or former officers (or any of them).

(3) Any sum which the credit union or other person is required by a direction to pay is a debt due from the credit union or person to the FCA or PRA .

Power to appoint inspector and call meeting.

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Cancellation or suspension of registration and petition for winding up.

Modifications of requirements as to audit of accounts.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Northern Ireland.

Rules.

Corporate members

Power to issue interest-bearing shares

Deposits by persons too young to be members.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Computation and application of profits.

Section 17: recovery of FCA ’s and PRA ’s costs

Power to appoint inspector and call meeting.

Amalgamations and transfers of engagements.

No conversion of credit union into company, etc.

Conversion of company into credit union.

Power to make provision corresponding to provision applying to building societies

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions as to offences.

Orders and regulations.

Interpretation, etc.

Northern Ireland.

Short title, commencement and extent.

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