Legal News for UK Co-ops and Mutuals

This is a blog where brief information about developments in UK Co-op and mutual law will be reported. Readers of this blog will also find Linda Barlow's Co-operatives UK Blog at helpful. For an network of academics working on co-ops, mutuals and social enterprises visit

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Interested in sharing information and knowledge around legal issues for co-ops and social enterprises in the co-oplawnews blog and thoughts on random issues in the "real" blog.

Thursday, December 10, 2009

FSA Road Show Slides for All Proposed Credit Union Changes

These helpfully bring it all together.

Presbyterian Mutual Society Working Group

This Group was due to Report last September but we're still waiting. Maybe soon..........

In the meantime the collapse of this Society into administration led initially to the immediate application of the adminitration procedure to Northern Irish I & P societies. This has not yet been done in GB.

Less directly, it has alsoled to a review of the Northern Ireland Credit Union and I & P Law (see paras 4.7.-4.15 on credit unions and 4.30. -4.40 on I & P's) and ripples in the UK (see pages 161-162 of this Consultation Document from HM Treasury)

In essence, NI credit unions would come under FSMA alongside their GB bretheren and thus enjoy the shelter of the Financial Services Compensation Scheme but their registration would stay with the Northern Ireland devolved Government as that what the movement there wants. I & P's will stay with NI but may get Law Reform along GB lines while also having to spell out ultra clearly to people with shares in them that this is risk capital and NOT protected as a deposit.

In GB, as in NI,the idea would be to apply the financial promotion regime (whereby any promotion of an investment has to be approved by a regulated person) to I & P shares - at least if they are not bound by of an effective Code of Practice (as Co-operativeUK's members are) which makes them tell people with shares that they have risk capital and not a deposit or savings and will lose the lot if there's a problem with the society's solvency.

Co-op Law Reform in the Republic of Ireland

This was published last April and is a useful guide to current law in Ireland and reform plans. For the main issues see the press release. To monitor progress visit this site.

Tougher Liquidity and Capital Requirements for Credit Unions

See the full text of the FSA Consultation Paper on the planned revision of CRED, the credit union source book here or the summary here. This is the credit unions' version of the tighter liquidity and capital requirements being imposed on banks in the light of the financial crisis. It also accommodates the regulstory reform order changes (see earlier post today).

Re-launch of Co-operative and Community Benefit Societies and Credit Unions Bill

The private member's bill which almost passed both Houses earlier this year has been launched again in the House of Lords. To follow its progress go here.

It is a very useful measure and is an important part of the process of updating industrial and provident society and credit union law.

Hope it makes it this time.

Law Reform Progress for I & P Societies and Credit Unions

The draft Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2010 has now been laid before Parliament. Here is the Explanatory Memorandum.

It follows on from the previous consultation documents and process.

Commencement seems to have gone back to 1st July 2010. The liberalisation of share capital rules (abolition of the £20,000 limit for non-withdrawable shareholdings) is probably the most exciting aspect for I & P's. For credit unions there are many new features, including: the possibility of corporate members; the possibility of paying interest rather than dividend on share capital; and a redefinition and further relaxation of the common bond concept.