Prudential Regulation Authority Rulebook

6.1

The PRA expects all credit unions to pay close attention to the quality of their underwriting of loans, whether unsecured or otherwise. Credit unions are expected to apply a consistent lending policy in making all credit decisions, and to retain records of such decisions for at least the life of the loan in question.

6.2

Where a credit union proposes to undertake fixed-rate lending (including mortgage lending), the PRA expects the credit union to be able to demonstrate, on request, that it has a thorough understanding of any risks that this activity may create, particularly interest rate and basis risk. In some circumstances (for example where a credit union has a material fixed-rate lending book), the PRA may engage with the credit union as to whether any fixed-rate lending for periods of more than two years should be reported using form FSA017.³ Where a credit union’s fixed-rate lending exposes it to specific material prudential risk it will be expected to make sufficient additional capital provision to mitigate such risk.