Credit unions face strict solvency and capital tests

All credit unions will have to meet basic solvency tests and
maintain a minimum level of initial capital under a new regulatory
regime, according to proposals from the government’s financial
services regulator.

Britain’s 700 credit unions – mutually owned financial
co-operatives allowing people on low incomes to save and take out
loans – are currently registered by the Registry of Friendly
Societies . But from July next year they will come under the
regulation of the Financial Services Authority (FSA). The move is
aimed at giving members. The same protection as savers with banks.
The FSA’s publication of the draft Credit Union Sourcebook sets out
plans to improve confidence in the financial soundness of credit
unions.

David Strachan, director of the FSA’s deposit takers division,
said: “This regime will increase consumer confidence in credit
unions, enabling them to grow and meet their wider social and
financial objectives.”