Credit Unions continue to play a vital role in local communities as they have done so successfully for generations. Their importance has particularly been highlighted during the banking sector post-recession reforms.
However, faced with changing technology and a more litigious world, risk management must be given top priority. As a director of a credit union you must be aware of both external and internal risks. To help mitigate these risks and review processes, most boards are engaging the expertise of outside consultants.
The PRA recently issued their annual letters to Credit Unions depending on their size and rate of growth. Expectations were clearly defined with the main points summarised below:
The PRA expect credit unions to have robust risk management policies and procedures which is underpinned by a Risk Appetite Statement. Measures and triggers should be built in that are consistent with and aligned to the risk tolerance levels of the Board.
Regular reviews and updates of SCV data are expected and testing of SCV files and procedures. Particular attention should be paid to joint accounts, accounts of inactive members and correct extraction of members’ details in line with the minimum address criteria.
Where a credit union intends to accept deposits over the FSCS secured amount (£85k), the credit union must notify the PRA in writing at least 5 business days prior to issuing non-deferred shares above this sum.
Plans should be in place designed to both cope during short term disruption and to then recover fully in the aftermath. In addition, Credit Unions should have systems capable of dealing with cyber-attacks.
Credit unions must be able to demonstrate they have appropriate systems and controls in place to identify and mitigate the risks of internal fraud.
In order to meet the expectations of the PRA, it is vital that directors are actively involved in the running of the credit union. Credit union boards should have strong governance arrangements and internal audit procedures in place.
Should you require further information in respect of this area, please contact our manager, Oonagh Tennyson or Director, Sean Cavanagh.
NI: +44 28 8775 5880
ROI: +353 1 699 4453
Oonagh Tennyson: firstname.lastname@example.org
Sean Cavanagh: email@example.com
T: 028 8775 5880 | (ROI) 016994453
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