PRA has written to credit unions setting out its conclusions from its annual assessment of the sector. Key messages, for both large and small credit unions are:
- that the likelihood of market conditions in the lending market remaining challenging is high, and this will impact on activities and operational costs. While the impact will depend on the business model and membership of any particular union, PRA expects all boards to be proactive in monitoring their prudential position. It particularly expects that firms should review their financial projections by the end of the year to ensure they continue to be realistic, particularly in relation to the next 36 months’ projections;
- PRA will be approaching credit unions which appear to have insufficient resources, whether financial or non-financial (eg failing to submit returns or having insufficient or disengaged directors), with a view to agreeing with them a plan to address the issues PRA has identified;
- the need to keep up to date governance of succession planning;
- a reminder to tell PRA of key operational changes; and
- the importance of maintaining up to date SCV files.