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MANCHESTER, U.K. – The regulation limiting British credit union member savings accounts to 5000 (US$9,120) may be raised to 10,000 (US$18,238) or to 1.5% of the total credit union shares. The Financial Services Authority (FSA) which regulates British credit unions has just finished a consultation period and will make a decision on the increased limit. The 5000 pound limit went into existence in 1990 when the FSA took over the regulation of credit unions. Savings limits have been a major factor in slowing greater credit union growth. Prior to 1990 credit unions were even more limited to the number of members that they could have, but that was also lifted by the FSA. The Association of British Credit Unions, Ltd. (ABCUL), has been actively promoting the regulation change and formally presented their support. At the same time the limit for loans currently at 5,000 (US $9,120) may also be increased to 7,500 (US$13,682) for small credit unions. Larger credit unions’ present limits are at 10,000 (US$18,238). The same proposal would raise those to 15,000 (US$27,363). ABCUL has welcomed a consultation from the Financial Services Authority which proposes increasing the amount of money which can be saved and borrowed by credit union members along with an increase in loan repayment periods. The consultation paper proposes raising the maximum amount that can be saved by each credit union member to 10,000, or 1.5% of the total shareholding of the credit union – a rise from 5,000 or 1.5% of the total shareholding. The 5000 limit has been in place since 1990 and will be a welcome change for credit unions, their members and junior savers who wish to continue saving over and above the current limits. Proposals to raise lending limits for small version 1 credit unions to 7,500 (from 5,000) in excess of the member’s shares are also included in the paper. Larger version 1 credit unions (with a capital/assets ratio of at least 5%) would see the limit raised to 15,000 (from 10,000) in excess of a member’s shares. Version 2 credit unions (of which there are 12) would be able to lend the greater of 15,000 or 1.5% of the total shareholding in excess of a member’s shares, up from the current limit of 10,000 or 1.5% of the total shareholding. Along with a rise in the upper limits for lending, the FSA is proposing to increase the maximum periods over which a loan can be repaid. Version 1 credit unions will be allowed to offer unsecured loans over periods of up to five years (currently three), and secured loans over periods of up to ten years (currently seven years). Version 2 credit unions will be able to lend for up to 10 years unsecured (currently five years) and up to 25 years secured (currently 15 years). Many of the proposed changes are derived from the Common Ground document, which contained proposals developed by the credit union movement as a result of ABCUL and the smaller credit union organizations working together. A number of other proposals are contained in the consultation document, along with suggested changes to additions to guidance contained in the FSA Credit Union Sourcebook (CRED). Responses are invited by Sept. 8, 2005 and it is envisaged that, should the credit union movement support these proposals, the changes will be incorporated into CRED by the end of the year. [email protected]

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