A credit union is incorporated under The Co-Operative and Community Benefit Societies Act 2014, and subject to the Credit Unions Act 1979 and the Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011.
All credit unions are dual-regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
How is a credit union managed?
Credit unions are owned and controlled by their members.
Like all credit unions, Stockport Credit Union has a set of rules (the “Rules”) to apply the legislative and regulatory requirements, and set out the purpose (or aims and objectives) of the organisation.
These Rules also show how the Board of Directors is appointed, how Stockport Credit Union is governed, and specific restrictions over how the Board of Directors can conduct certain business.
The Board of Directors is responsible in law and to the regulators to run Stockport Credit Union for one simple aim: for its members’ benefit, in line with the stated purpose.
Each year, members are invited to an Annual General Meeting (AGM) where the members vote on several matters such as the appointment of new Directors, or approval of the statutory accounts, and anything else that the Board needs to get the members’ permission for under the Rules.
How does this work at Stockport Credit Union?
Stockport Credit Union has an elected Board of up to 15 Directors, and its Rules follow the standard template set out by the Association of British Credit Unions Limited (ABCUL) of which we are a member. ABCUL represent c70% of UK credit unions and provides a full range of advice, training and development services to help its members grow.
The Board is the governing body of Stockport Credit Union and is responsible for determining the business strategy, establishing the operations, and designing policies to control and manage activities for the benefit of the members.
The most Senior Manager then designs a business plan and financial forecast to deliver the strategy.
The Board monitors the financial performance and business plan at an official Board Meeting each month and reports to the members at the AGM on how successful it has been at meeting the aims and objectives as defined in the Rules.
The Board must also make sure that Stockport Credit Union complies with all legal, regulatory and governance requirements. It must protect the people and assets of Stockport Credit Union and is responsible for all aspects of its performance and operation.
Does Stockport Credit Union make a profit?
In essence yes, but it is usually referred to as a ‘surplus’.
Stockport Credit Union is a social enterprise. That means we reinvest the majority of our surplus back in to the organisation to achieve our aims.
How we spend our surplus is determined by both the regulator and our accounting policies as follows:
- The regulator requires that we hold a certain amount of surplus in reserves, calculated as a proportion of our assets.
- The Board may declare a dividend to pay from the aggregated surplus to our saver members (effectively interest on your savings balance)
- The rest is held in reserves for reinvestment to achieve our aims or provide protection against adverse business performance.