MANCHESTER, U.K. – The regulation limiting British credit unionmember 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. TheFinancial Services Authority (FSA) which regulates British creditunions has just finished a consultation period and will make adecision on the increased limit. The 5000 pound limit went intoexistence in 1990 when the FSA took over the regulation of creditunions. Savings limits have been a major factor in slowing greatercredit union growth. Prior to 1990 credit unions were even morelimited to the number of members that they could have, but that wasalso lifted by the FSA. The Association of British Credit Unions,Ltd. (ABCUL), has been actively promoting the regulation change andformally presented their support. At the same time the limit forloans currently at 5,000 (US $9,120) may also be increased to 7,500(US$13,682) for small credit unions. Larger credit unions' presentlimits are at 10,000 (US$18,238). The same proposal would raisethose to 15,000 (US$27,363). ABCUL has welcomed a consultation fromthe Financial Services Authority which proposes increasing theamount of money which can be saved and borrowed by credit unionmembers along with an increase in loan repayment periods. Theconsultation paper proposes raising the maximum amount that can besaved by each credit union member to 10,000, or 1.5% of the totalshareholding of the credit union – a rise from 5,000 or 1.5% of thetotal shareholding. The 5000 limit has been in place since 1990 andwill be a welcome change for credit unions, their members andjunior savers who wish to continue saving over and above thecurrent limits. Proposals to raise lending limits for small version1 credit unions to 7,500 (from 5,000) in excess of the member'sshares are also included in the paper. Larger version 1 creditunions (with a capital/assets ratio of at least 5%) would see thelimit raised to 15,000 (from 10,000) in excess of a member'sshares. Version 2 credit unions (of which there are 12) would beable to lend the greater of 15,000 or 1.5% of the totalshareholding in excess of a member's shares, up from the currentlimit of 10,000 or 1.5% of the total shareholding. Along with arise in the upper limits for lending, the FSA is proposing toincrease the maximum periods over which a loan can be repaid.Version 1 credit unions will be allowed to offer unsecured loansover periods of up to five years (currently three), and securedloans over periods of up to ten years (currently seven years).Version 2 credit unions will be able to lend for up to 10 yearsunsecured (currently five years) and up to 25 years secured(currently 15 years). Many of the proposed changes are derived fromthe Common Ground document, which contained proposals developed bythe credit union movement as a result of ABCUL and the smallercredit union organizations working together. A number of otherproposals are contained in the consultation document, along withsuggested changes to additions to guidance contained in the FSACredit Union Sourcebook (CRED). Responses are invited by Sept. 8,2005 and it is envisaged that, should the credit union movementsupport these proposals, the changes will be incorporated into CREDby the end of the year. [email protected]

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