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Reviewing the funding of FSCS

Response to the consultation

Credit unions, as the smallest deposit-taking sector, participate in the deposit acceptor funding class of the Financial Services Compensation Scheme. Due to a combination of factors including a number of regulatory exemptions – particularly consumer credit – and limitations on the activities credit unions can perform arising from legislation, generally credit unions only contribute to this one funding class.

Since the rules for the deposit-acceptor funding class are set by the PRA, the proposals under consultation in this review largely do not impact the credit union sector.  As such our response to the consultation is limited in that we only refer to those limited areas which impact credit unions.

Restructuring the levy classes in the retail pool

We do not have particularly strong views regarding the three proposed alternative funding class models put forward by the consultation.  Generally speaking, however, our members as smaller institutions value simplicity and therefore we believe that Option 1 represents the most favourable model. 

Protection for structured deposits

We do not object to the principle that deposit-takers who sell structured deposit products should contribute to a levy to protect those mis-sold such products.  However, credit unions do not sell such products and therefore we strongly support further reporting requirements in order that only those deposit takers that do sell such products are required to contribute to any levy.

Protecting debt management firm customers

We agree with the proposals for protecting client money held by debt management firms. 

We would be delighted to provide any further information should you require it.

The response is also available to download in a PDF format on the right-hand side.