Financial Services and Markets Act 2000 (Consequential Amendments and Transitional Provisions) (Credit Unions) Order 2002

JurisdictionUK Non-devolved
CitationSI 2002/1501

2002No. 1501

FINANCIAL SERVICES AND MARKETS

The Financial Services and Markets Act 2000 (Consequential Amendments and Transitional Provisions) (Credit Unions) Order 2002

10thJune2002

10thJune2002

2ndJuly2002

The Treasury, in exercise of the powers conferred upon them by sections 426 to 428 of the Financial Services and Markets Act 2000( 1), hereby make the following Order:

Citation, commencement and interpretation

1. - (1) This Order may be cited as the Financial Services and Markets Act 2000 (Consequential Amendments and Transitional Provisions) (Credit Unions) Order 2002 and comes into force on 2nd July 2002.

(2) In this Order -

"the Act" means the Financial Services and Markets Act 2000;

"the 1965 Act" means the Industrial and Provident Societies Act 1965( 2);

"the 1979 Act" means the Credit Unions Act 1979( 3);

"commencement" means the beginning of 2nd July 2002;

"credit union" means a society registered under the 1965 Act by virtue of section 1 of the 1979 Act( 4);

"deposit" has the meaning given by article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001( 5);

"the Permission Order" means the Financial Services and Markets Act 2000 (Permission and Applications) (Credit Unions etc.) Order 2002( 6).

PART 2

AMENDMENTS TO THE 1979 ACT ETC.

Amendments to the 1979 Act

2. - (1) Subject to any transitional provision made by Part 3 of this Order, the 1979 Act is amended as follows.

(2) In section 1 (registration under the 1965 Act) -

(a) in subsection (1) - (i) for "sections 6(4) and 15(1)", substitute "section 6(4)";(ii) omit the word "and" at the end of paragraph (b);(iii) after paragraph (c), insert -

" (d) the society has made an application to the Authority for Part IV permission under section 40 of the Financial Services and Markets Act 2000 (in this Act referred to as "the 2000 Act") to accept deposits; and

(e) the Authority is satisfied that, once registered under the 1965 Act, the society will satisfy, and continue to satisfy, the threshold conditions set out in Schedule 6 to the 2000 Act in relation to the regulated activity of accepting deposits;"; and(b) after subsection (1), insert -

" (1A) The Authority shall not issue an acknowledgement of registration under section 2(3) of the 1965 Act to a credit union unless it also proposes to give that society permission under Part IV of the 2000 Act to accept deposits.

(1B) If the Authority issues an acknowledgment of registration to a credit union under that section, it shall determine any outstanding application of that credit union for permission under Part IV of the 2000 Act to accept deposits as soon as reasonably possible thereafter.".

(3) In section 2(1) (supplementary and transitional provisions as to registration), after "matters to be provided for in their rules)", insert "and section 7(3) of that Act (acceptance of certain deposits not to be treated as carrying on the business of banking)".

(4) In section 5 (maximum interest of members)( 7), omit subsections (3), (4), (4A) and (10).

(5) In section 8 (general prohibition on deposit-taking)( 8), omit subsections (2), (4) and (5).

(6) In section 9 (deposits by persons too young to be members)( 9) -

(a) in subsection (1), omit the words "up to a total of £5000" and the words from "; and nothing in section 7(3)" to the end of that subsection; and(b) omit subsections (2) to (5).

(7) In section 10 (power to borrow money)( 10) -

(a) in subsection (1), omit the words from "from an authorised bank" to the end of that subsection; and(b) omit subsections (2) to (6).

(8) In section 11 (loans)( 11) -

(a) for subsection (1), substitute -

" (1) A credit union may make to a member a loan, upon such security (or without security) and terms as the rules of the credit union may provide."; and

(b) omit subsection (4).

(9) Omit section 13 (investments)( 12).

(10) In section 14 (computation and application of profits)( 13), omit subsections (1) and (7).

(11) Omit section 15 (insurance against fraud or other dishonesty)( 14).

(12) In section 17(1), omit subsections (2) and (3) (power to require financial statement).

(13) In section 18(1) (power to appoint inspector and call meeting)( 15), after "is of the opinion that", insert ", for reasons connected with the exercise of its functions under this Act or the 1965 Act,".

(14) Omit section 19 (power to suspend operations of credit union)( 16).

(15) After subsection (1) of section 20 (cancellation or suspension of registration), insert -

" (1A) The Authority may also exercise the power to cancel the registration of a credit union in accordance with section 16 of the 1965 Act where the credit union's Part IV permission has been cancelled or where the Authority has given the credit union a warning notice under section 54(1) of the 2000 Act.

(1B) Cancellation of registration under section 16 of the 1965 Act by virtue of subsection (1A) may not take effect until the Authority has cancelled the credit union's Part IV permission and there is no possibility (or no further possibility) of that determination of the Authority being reversed or varied.

(1C) In its application to credit unions, in subsection (4) of section 16 of the 1965 Act, the reference to the ground referred to in subsection (1)(c)(ii) shall include a reference to the ground mentioned in subsection (1A) of this section.

(1D) Section 18 of the 1965 Act does not apply in relation to a decision of the Authority to cancel the registration of a credit union by virtue of subsection (1A) of this section (and so a society may not appeal from a decision of the Authority to cancel its registration by virtue of subsection (1A)).".

(16) In section 21(3)(a) (amalgamations and transfers of engagements)( 17), after "Industrial and Provident Societies Acts 1965 to 1978", insert "or any requirement imposed by or under the 2000 Act".

(17) In section 23(3) (conversion of company into credit union)( 18) -

(a) at the end of paragraph (a), insert "and";(b) in paragraph (b), for the words "section 5(3) above", substitute "any applicable rules made by the Authority under the 2000 Act";(c) omit the word "and" at the end of paragraph (b); and(d) omit paragraph (c).

(18) In subsection (2) of section 24 (dis-application of requirements as to interim balance sheets)( 19), omit the words from "and section 39(1) of the 1965 Act" to the end of that subsection.

(19) Omit section 27 (prohibition on undischarged bankrupts and other persons).

(20) In section 31 (definitions)( 20) -

(a) in subsection (1) - (i) omit the definition of "authorised bank"( 21); and(ii) after the definition of "non-qualifying member", insert -

" "Part IV permission" means a permission given by the Authority under Part IV of the 2000 Act or having effect as if so given;";

(b) for subsection (1A)( 22), substitute -

" (1A) In this Act, references to a deposit or accepting deposits must be read with -

(a) section 22 of the 2000 Act;(b) any relevant order under that section; and(c) Schedule 2 to that Act."; and(c) after subsection (3), insert -

" (4) Sections 7(1)(b) (registered society not to carry on the business of banking), section 39 (annual accounts)( 23) and section 40 (display of latest balance sheet)( 24) of the 1965 Act (which are replaced by, or are inconsistent with, provisions of the 2000 Act) do not apply to credit unions.".

(21) In Schedule 1 (matters to be provided for in rules of credit union) -

(a) in paragraph 7, for "subject to section 5(3) of this Act", substitute "subject to any applicable rules made by the Authority under the 2000 Act";(b) in paragraph 11, after "the Friendly and Industrial Provident Societies Act 1965", insert "and any applicable rules made by the Authority under section 340 of the 2000 Act"; and(c) in paragraph 13, omit sub-paragraph (a).

(22) Omit Schedule 2( 25).

Revocations

3. The following regulations and instruments, which were made under the 1979 Act, are revoked -

(a) the Credit Unions (Insurance against Fraud) etc. Regulations 1980( 26);(b) the Credit Unions (Increase in Limits of Shareholding, of Deposits by persons too young to be members and of Loans) Order 1989( 27);(c) the Credit Unions (Authorised Investments) Order 1993( 28); and(d) the Credit Unions (Increase in Limits on Deposits by persons too young to be members and of Periods for the Repayment of Loans) Order 2001( 29).

PART 3

TRANSITIONAL PROVISIONS

Application of definition of "consumer" to customers of credit unions before commencement

4. - (1) In section 138 of the Act (Authority's general rule-making power)( 30), "consumers" includes (in addition to persons defined as "consumers" in subsection (7)) persons -

(a) who before commencement used the services provided by a credit union in the course of accepting deposits;(b) who have rights or interests which are derived from, or are otherwise attributable to, the use of such services by other persons; or(c) who have rights or interests which may be adversely affected by the use of any such services by persons acting on their behalf or in a fiduciary capacity in relation to them.

(2) The definition of "consumers" in paragraph (1) is referred to in this article as "the extended definition".

(3) For the purposes of the extended definition, subsection (8) and (9) of section 138 of the Act apply as if -

(a) references to an authorised person were references to a credit union; and(b) references to carrying on a regulated activity were references to accepting deposits.

(4) The extended definition applies for the purposes of subsection (3) of section 5 (the protection of consumers), subsection (7) of section 10 (the Consumer Panel), subsection (5) of section 14 (cases in which the Treasury may arrange independent inquiries), subsection (6) of section 186 (objection to acquisition of control) and subsection (11) of section 391 (publication of notices) of the Act.

(5) But the extended definition does not apply for the purposes of paragraph 1 of Schedule 4 to the...

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