The number of credit unions attending the conference was greatly reduced to about 30. The other change was that several credit unions in Wales and the south west of England decided to reduce costs by going home at the end of each day and returning the following days. The other change was the extra session on the Sunday about the future of the credit union movement.
The evaluation sheets showed that the conference itself was rated very highly with most of the credit unions marking speakers as excellent or good. There were some complaints about the food and that the conference room was stuffy, but praise for the staff at the Hilton who were very friendly and helpful.
Charles Roe, from the FCA had arrived on the Friday evening and joined us for the evening meal. His presentation on the Saturday morning was highly rated and delegates found him friendly and informative. FCA liaise with HM Treasury and they recognise that trust in banks has reduced, with the financial problems of ppi, Libor and fat cat bonuses making them seen unreliable.
With regard to credit unions they should not be seen as an alternative to pay day lenders and should not be seen as the 'poor man's bank'. In GB they have a very low penetration rate of 2% and this needs to be increased.
Governance is important but the FCA is not looking for boards made up of professionals, but run in a professional way. The FCA are adopting a three pillar approach to supervision for banks, building societies and credit unions and has defined categories – C3 including the largest credit unions in Northern Ireland, Glasgow and the police credit union. One of the pillars is the thematic approach where they send out questionnaires to credit union to test their knowledge of CREDS and the next one of these will be sent to credit unions in Scotland. Credit unions need to be clear about how decisions are made.
Changes are being made to the approved persons scheme with one key person being responsible for this overall and putting things right.
Financial Services Compensation Scheme – Andrew Breese
Despite the fact that ACE had started asking for a speaker from the service in October 2013 and had followed this up in December and March, we were told at the last minute that that not one was available. We are therefore grateful to Andrew for stepping in at the last minute. He covered a number of important points: that directors were limited to £1 guarantee if the credit union failed – but would have to have acted in good faith and properly; that where credit unions merged a new SCV (single customer view) would have to be produced which included both the existing members and those joining the credit union; that credit unions funds are only covered by the scheme up to £85k, as for individuals and this created real problems in making sure that investments are spread across a number of firms. He also said that a Will took, precedence over the beneficiary forms which members sign which caused some consternation and needs to be followed up. There were a number of issues around how to deal with dormant accounts, special accounts and linked accounts. Dormant accounts must now be held for 15 years.
Governance – Darren O'Neill
In CREDS 2.2 minimum standards are set but credit unions need to aim to set standards above that minimum level. Having a template to help build their policies and procedures but these need to be tailored to their own credit union. Everyone working for the credit union need to be involved with a good clear plan and decision that are consistent with that plan. He emphasised the important of internal audit, segregation of duties and collective responsibility. A succession policy is essential so that there is continuity of knowledge, ethos and skills.
Pensions – Ian Lowe
Ian said that this was a complex subject and that he could only provide a brief introduction to the topic. All employers will have to provide a pension where they have more than two employees. There will be a ‘staging date’ letter which will be sent to employers giving them 12 months notice of the need to setup a scheme. Five months after the Staging Date they will have had to draw up a plan for their scheme. Fines are extremely high (up to £10K). There are firms that can help with this process but firms need to be careful about choosing a firm and to be aware of costs. NEST is the pensions regulator. Pensions must cover those aged 22 or over upto 75 years and on wages of £5700.72 and over. 16 to 21 years old are not eligible. The level of pension can be decided by the employer and employees pay into this scheme.