PRA published the policy statement PS6/20, which contains the final policy on amendments to the Credit Union Part of the PRA Rulebook (Appendix 1) and the updated supervisory statement SS2/16 on the prudential regulation of credit unions (Appendix 2). PS6/20 also provides feedback to the responses received to consultation paper CP28/19 on the review of the capital regime for credit unions. PS6/20 is relevant to all credit unions and the changes in PS6/20 take effect from March 16, 2020.
The updated supervisory statement SS2/16 sets out the PRA expectations of credit unions with regards to the Credit Union rules. It applies to all UK credit unions as defined in the Credit Union Rulebook Part. Areas covered include capital, liquidity, additional activities, maximum deposit levels, fixed-rate shares and deposits, lending, investments, and governance and organization. This statement is intended to be read together with the rules contained in the Credit Union Rulebook Part. The statement seeks to advance the statutory objective of PRA to promote the safety and soundness of the firms it regulates by setting out the expectations on how credit unions should comply with core elements of the regulatory framework contained in the Credit Union Rulebook Part. As per the regime, a credit union will be expected to maintain the relevant minimum requirement specified by Credit Union 8.5 at all times.
SS2/16 was amended following the publication of PS6/20 on the review of capital regime for credit unions to update the capital requirements for credit unions. The changes include deletion of paragraphs 2.3-2.5, addition of new paragraph 2.6, amendment to paragraph 4.1, addition of the new paragraph 4.2A, amendments to paragraphs 4.3 and 4.4, and amendments to Tables 1 and 2. SS2/16 was also updated to simplify the formatting and language, where helpful, to aid readability and to update links in footnotes.
The policy set out in PS6/20 has been designed in the context of the withdrawal of UK from EU and entry into the transition period, during which time the UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the EU take effect. PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA) at the end of the transition period.
Effective Date: March 16, 2020
Keywords: Europe, UK, Banking, PRA Rulebook, Credit Union, SS 12/16, Regulatory Capital, Proportionality, CP 28/19, PS 6/20, PRA
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