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Financial Services & Markets Bill Proposes Changes To Legislation

What has happened?

The current Financial Services and Markets Bill proposes certain changes to union legislation in Great Britain. These changes, as at July 2023, have not yet been passed by Parliament and so are not yet in force.

What are the key points?

The proposed changes include increasing the range of products or services that a credit union can offer. It will be up to each credit union to decide whether to offer these. If a credit union does want to offer the proposed additional products and services, it will need to complete several steps first, including:

  • Passing any necessary rule amendments and submitting these for registration with the FCA, and

  • Applying for, and obtaining, relevant permissions under the Financial Services and Markets Act 2000 (FSMA) if it does not have them already.

The Financial Services and Markets Bill proposes certain changes to the Credit Unions Act 1979 (CUA79). Section 69 and Schedule 14 of the Bill provide the details of these. The key changes are summarised below.

Credit unions will be able to choose to adopt an additional object: ‘to carry on one or more of the financial activities specified in s1ZA(1) for the benefit of the members of the society.’

Section 1ZA(1) of CUA79 will cover these new activities:

a) entering into conditional sale agreements, as the seller,

b) entering into hire purchase agreements, as the person from whom goods are bailed or (in Scotland) hired, and

c)  insurance distribution activities

Credit unions need to have permission under the FSMA before carrying on or agreeing to carry on any of these regulated activities.  

It is also proposed that credit unions will be required to send annual returns to the FCA within seven months of the end of their financial year. This does not require any additional action for firms since submitting signed and audited accounts annually on time will meet both the CREDS (credit union sourcebook) requirement and the legislative requirement.  

Credit unions must also follow sections 77 and 78 of the Co-operative and Community Benefit Societies Act 2014, on how to calculate the financial year-end date and procedures for specifying a different one.

Once the Bill receives Royal Assent, if the credit union wants to take advantage of the new powers, it will need to: 

1. Get agreement to amend its rules to include the new additional object. The current rules set out the process for member agreement to rule amendments, and

2. Submit that rule amendment to the FCA for registration. 

Once the FCA has registered that rule change, a credit union can apply for any necessary regulatory permissions under FSMA. It may apply for permission for the following activities: 

  • Entering into conditional sale (CS) agreements, as the seller. This means credit unions will be able to enter into finance agreements with members for the purchase of goods such as cars or white goods, under a conditional sale agreement. 

  • Entering into hire purchase agreements, as the person who bails or (in Scotland) hires goods. This means that credit unions will be able to enter into hire purchase agreements with their members for goods such as cars or white goods.  

  • Insurance distribution activities. 

Credit unions with existing permissions

Credit unions that already hold the relevant permissions to offer hire purchase and/or conditional sales must not begin offering these services until Royal Assent has been granted and the relevant provisions have come into force.

Should the Bill be passed, and a credit union wishes to offer new services, this must first be agreed by its members. Once it is agreed, firms will need to submit details of these changes for registration with the FCA. Following this, firms should then submit a notification on the changes to their business model.

How can we help you?

Thistle Initiatives has supported firms as a trusted credit compliance and regulatory advisor, particularly through FCA cryptoassets registration. Our team of specialists can serve as your right hand in meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Are you looking for help with your credit union permissions, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or send an email to