National Supervisors’ Forum

1. National Supervisors’ Forum November 2nd2013 Keith Savage Antrim Credit Union Limited

2. N.S.F. Proposed Updates to NI Credit Union Legislation

3. N.S.F. • Introduction • Background / History • Proposed Updates • How Does This Affect the Supervisory / Internal Audit Function? • Summary • Any Questions?

4. Background / History • March 2008 • Committee for Enterprise, Trade and Investment commissioned a Report into the “Role & Potential of Credit Unions in NI • This was published in February 2009

5. Background / History • 8 Recommendations for DETI, HMT and FSA to take forward • Enquiry initiated due to ILCU / UFCU concerns over “inability to offer their Members the same range of services as GB, RoI

6. Background / History • HMT (Pre-Budget Report 2008) • Separate, Independent Review of the Legislative Framework of Credit Unions in NI • HMT recommended NI Assembly “amend and update legislation”

7. Background / History • March 2010 • HMT / DETI Joint Consultation • “Proposals for Regulatory Reform of Credit Unions in NI” • August 2011 • Further Consultation • “FSA Regulation of Credit Unions in NI”

8. Background / History • March 2012 • FSA Regulation of Credit Unions in NI • Access to:- • Financial Services Compensation Scheme (FSCS) • Financial Ombudsman Service (FSO)

9. Next Step • Proposed Credit Union (and IPS) Bill • DETI has historically maintained Legislative Parity with GB on Credit Unions • Current Consultation is a Proposal to update the CU (NI) Order 1985 • This will then result in an update of CREDS

10. Current Consultation • Consultation Period ended on 06/09/2013 • Made to Company Law Branch DETI • 13 “Issues” in relation to CU Legislation • These were put to Cus as a series of questions and responses invited

11. Questions • CONSULTATION QUESTION 1 • Do you think that the minimum age requirements as laid down in the 1985 Order should be amended to reflect those set out in legislation in GB following the LRO? • CONSULTATION QUESTION 2 • Do you think that the 1985 Order should be amended to permit credit unions to charge non-members a fee not exceeding £5 for a copy of that society’s rules?

12. Questions • CONSULTATION QUESTION 3 • Do you think credit union members should be given a copy of their society’s rules free of charge? • CONSULTATION QUESTION 4 • Do you think that the 1985 Order should be amended to provide NI credit unions with an alternative easier method of dissolution similar to that facilitated under the LRO in GB?

13. Questions • CONSULTATION QUESTION 5 • Do you think that the current definition of common bond as prescribed by the 1985 Order should be retained or should the provisions be amended to reflect those in GB as prescribed by the LRO? • CONSULTATION QUESTION 6 • Do you think it is appropriate to remove the current 10% limit on non qualifying members from the 1985 Order to reflect the position in GB as prescribed in new provisions within the LRO?

14. Questions • CONSULTATION QUESTION 7 • Do you think that the 1985 Order should be amended to permit the admission of the following to credit unions: •  a body corporate; •  a partner acting for a partnership; and •  an officer or member of the governing body acting for an unincorporated association to be permitted to join a credit union?

15. Questions • CONSULTATION QUESTION 8 • If so, do you agree that no more than 10% of a credit union’s membership should be composed of such members, and that those members‟ shareholdings in any credit union should not exceed 25%? • CONSULTATION QUESTION 9 • Do you agree that credit unions should be allowed to offer to members deferred shares?

16. Questions • CONSULTATION QUESTION 10 • Do you think that the 1985 Order should be amended to permit credit unions to offer interest-bearing shares? • CONSULTATION QUESTION 11 • Do you think that the current 8% per annum limit on dividends should apply only on the dissolution of a credit union?

17. Questions • CONSULTATION QUESTION 12 • Do you think that the current rules in relation to attachment of shares as contained in the 1985 Order should be retained for NI credit unions? • CONSULTATION QUESTION 13 • Do you think that the maximum interest rate credit unions can apply to loans should be increased to 3% per month or should the current 1% limit be retained?

18. Questions • CONSULTATION QUESTION 14 • Do you think that there should be a relaxation of the current 3% dividend requirement for the application of surplus for social, cultural and charitable purposes? • CONSULTATION QUESTION 15 • Do you think that the provisions, as contained in Article 25A of the Company Directors Disqualification (NI) Order 2002 should be extended to include those credit unions registered under the Credit Unions (Northern Ireland) Order 1985?

19. Supervisors / Internal Auditors • Section 2.2.43 of CREDS identifies the purposes of an internal audit as being; • To ensure the Policies & Procedures of the Credit Union are being followed • To provide the Board of Directors with a CONTINUOUS APPRAISAL of the overall effectiveness of the Control System in place and to RECOMMEND improvements where necessary

20. Supervisors / Internal Auditors • Internal Audit Plan • Planning should cover ALL aspects of the Credit Union’s business • Areas identified as High Risk should be covered more frequently

21. Summary • Consultation arising out of concerns over Service to Members • Changes to 1985 Order • Changes to CREDS • Increased range of Services / Powers available to NI Credit Unions

22. Summary • Audit Plans will need a wider scope • Increased Services will need more Supervision • Increased Powers available to Boards of Directors will need more Supervision

23. Any Questions?