Credit Union Business and Regulatory Status

Thursday 11 January 2024

Often credit unions experience confusion or difficulties form partners and suppliers in understanding the legal status of the credit union as a business. For instance, the ‘Ltd’ at the end of the credit union registered name leads people to search in Companies House. This information aims to clarify the legal status as a business and assist in informing partners and suppliers on how they can verify the legal existence of the credit union.

 

The key points

  • Credit unions are registered under the Co-operative and Community Benefit Societies Act 2014.
  • The credit union’s registration number is the one which ends in ‘C’ or ‘CUS’.
  • The Financial Conduct Authority (FCA) is the registrar for credit unions (as well as other co-ops and mutuals) and this registration function is undertaken by its Mutuals Team. This is separate from the FCA’s role as a regulator of the financial services industry in the UK.
  • Societies registered under the Co-operative and Community Benefit Societies Act 2014 by the FCA are not registered with Companies House. Instead, a separate register is maintained by the FCA called the ‘Mutuals Register.‘ This is where you can view details of all registered societies.
  • Credit Unions are ‘limited liability’ (Ltd) to protect the financial liability of individual directors.

Registration with the Mutuals Team of the FCA

The functions of the Mutuals Team include registering new  societies; registering and recording documents on behalf of mutual societies. These include co-operative societies, community benefit societies, credit unions, building societies and friendly societies.

When a credit union is registered it is provided with:

  1. A certificate of registration which is attached to the registered rulebook. This is the equivalent of a certificate of incorporation issued to a business registered under the Companies Act.
  2. The registered rules of the credit union which are its constitution and are equivalent to the Memorandum and Articles of Association.
  3. ‘Limited liability status’. This means that the term ‘Ltd’ is used in the credit union name and limits the liability of the directors. Despite using the term ‘Ltd’ credit unions are NOT registered with Companies House. (If you search for the credit union under Companies House, it will give the credit union a company number beginning ‘IP00’, e.g. IP00455C and then refer you to the Financial Services Register.

Regulation and Authorisation

  • Credit unions are authorised by the Prudential Regulation Authority (PRA) as deposit-takers.
  • Credit unions are regulated by both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

The credit union specific regulations for the regulators can be found below: