Schedule 14: Credit unions
This Schedule amends the Credit Unions Act 1979.
	Section 1 (3ZZA) introduces a new, optional object for credit unions. This is the section which allows credit unions to offer the new services specified in section 1ZA, should they choose to adopt this new object into their rules and subject to any relevant regulatory permissions.
	Section 1ZA outlines the services that fall under the optional object and the new powers HM Treasury has in relation to this new object. The services are hire purchase agreements, conditional sale agreements, and insurance distribution services. It also sets out that HM Treasury may specify future regulations relating to these objects.
	Section 1ZB grants HM Treasury powers to make regulations to amend section 1ZA relating to the new, optional object and the processes HM Treasury must go through to make the regulations. HM Treasury may add new activities to the optional object in future, and any amendments to the rest of the Credit Unions Act 1979 as needed, to support the new products or services. Before HM Treasury can add any further products or services under the new object, it must consult with people it deems appropriate, and it must secure approval for the additions from both Houses of Parliament.
	The amendments to section 2(3) specify that a society must be registered as a credit union provided it has, wholly or substantially, the mandatory objects, regardless of whether it takes on the new, optional object 3ZZA.
	Section 7 (5A) places restrictions in certain circumstances on members’ ability to withdraw shares held when they have taken out secured hire purchase agreements and/or conditional sale agreements with the credit union.
	Section 9A is amended to allow credit unions to charge for services ancillary to entering into a conditional sale agreement or hire purchase agreement.
	Section 11 clarifies that credit unions may offer loans to other credit unions, regardless of whether they have a membership link with the lending credit union. The lending must be repaid in six months or less. These loans are subject to the same interest rate cap as all other loans made by credit unions. This does not affect existing loans between credit unions.
	Section 11E details further provisions as to how credit unions may offer hire purchase agreements or conditional sale agreements. It specifies that credit unions may offer these services to their members if they have adopted the optional object into their rules. They may offer these products to corporate members provided that their rules allow them to enter into these agreements with corporate members, and provided that the aggregate, outstanding balances of the agreements with corporate members are no more than 10% of the aggregate outstanding balances of these contracts provided to members. This is to ensure that credit unions primarily remain focused on serving their retail members as mutual organisations. The 10% rate may be amended by HM Treasury.
	This section also specifies that credit unions must include in the terms of an agreement whether the borrower may withdraw any of their shares during the repayment period. Finally, it also outlines that these agreements are subject to a 3% interest rate cap, the same as credit union loans, and that HM Treasury may amend this rate.
	Section 11F details provisions for treating hire purchase agreements or conditional sale agreements as secured agreements.
	Section 11G introduces the terms under which a credit union may offer insurance distribution services to members and specifies that it may charge a fee as deemed appropriate for providing the service. This section also specifies that a credit union must have adopted the new object 3ZZA in its rules to carry out insurance distribution.
	Section 12(3) is amended to allow credit unions to hold an interest in land for the purposes of securing hire purchase agreements or conditional sale agreements.
	Subsection (5) of section 23A is omitted as it is instead moved into the "interpretation" section.
	The amendment to section 29 is self-explanatory.
	Section 31 is amended to provide definitions for the new financial activities included in the new, optional object 3ZZA. It also includes the definition of "enactment" which was removed from section 23A. Subsection (4) of this section requires credit unions to submit annual returns to the Financial Conduct Authority and requires credit unions to be subject to the year of account provisions in the Co-operative and Community Benefit Societies Act 2014.
	Schedule 1(9) is amended to require credit unions to outline the mode and circumstances in which loans to other credit unions, alongside loans to members, are made and repaid in their rules.
	A transitional provision is made to ensure that amendments to section 11 and Schedule 1(9) do not apply retrospectively to any loans credit unions may have made to another credit union before Royal Assent of this Act.
	A transitional provision is included to ensure that a credit union’s current year-end remains intact, and that the provisions for year of account do not apply retrospectively to previous years of account.