Explanatory note

This Order sets out the transitional provisions relating to the expiry, on 2nd July 2002, of the transitional exemption of credit unions from the general prohibition imposed by section 19 of the Financial Services and Markets Act 2000 (“the Act”) (see article 6 of the Financial Services and Markets Act 2000 (Exemption) Order 2001 (S.I. 2001/1201)). Article 2 provides that all unauthorised credit unions are to be treated, at 2nd July 2002 (“commencement”), as having permission to accept deposits by way of subscription for their shares. Article 3 enables the Authority to require credit unions of a specified description to reapply for permission. If a credit union which falls within a specified description fails to reapply for permission by the date specified in the direction, its permission ceases to have effect. The Authority may impose such a requirement before commencement but the requirement does not have the effect until commencement. Article 4 sets out procedural provisions that relate to the requirement to reapply for permission.

Article 5 provides that restrictions imposed under section 19 of the Credit Unions Act 1979 have effect from commencement as if they were requirements imposed under section 43 of the Act. Article 5 also makes transitional provisions in relation to the lending powers of credit unions.

Article 6 makes transitional provisions for people working for credit unions who will, after commencement, be subject to the regime for approved persons in Part V of the Act. Such persons are taken to have been approved by the Authority for the purposes of section 59 of the Act.

Article 7 enables credit unions from 8th April 2002 (“applications day”), to apply for a variation of a requirement to which they will, by virtue of article 5, be subject from commencement. Applications may also be made for approval of persons who will, after commencement, be subject to the to the regime established under Part V of the Act (approved persons). The Authority may also initiate action under section 45 of the Act (exercise of own initiative powers) or section 56 (prohibition orders) from applications day. Nothing done under the Act by virtue of article 7 takes effect before commencement.

Article 8 enables the Authority, from applications day, to exercise its powers under section 165 of the Act (information gathering) in relation to those credit unions which it has reasonable grounds to believe will be authorised persons at commencement.

Article 9 makes certain transitional provisions in relation to St. Paul’s Mutual Aid Society. By virtue of article 20(4) of the Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001 (S.I. 2001/2636), the Society was exempt from the general prohibition imposed by section 19 of the Act until 1st July 2002.

A copy of the Authority’s Handbook (which includes the Credit Union Sourcebook) may be obtained from The Financial Services Authority by logging on to their website or applying to their principal offices at 25 The North Colonnade, Canary Wharf, London E14 5HS.