Offering loans to UK residents only
We are now only offering loans to members who are UK residents, and we want to make you aware of this change and the reasons behind why we have taken this decision. As a not-for-profit organisation we must make decisions which are in the best interests of all our members, and it was with a heavy heart we took the decision to remove the loan offering to non-UK residents. We are sorry to disappoint those members who are living abroad but we want to explain the reasons behind this decision.
The impact of Brexit
As you are aware the UK’s departure from the European Union (EU) led to several changes, the main one for financial services was the ability “passport” legally into an EU country.
Cross-border transactions were previously permitted because all EU member states had to abide by the same financial regulation rules within the single market. The UK’s regulator, the Financial Conduct Authority (FCA), had to meet the same standards as the other regulators in each country within the EU. As the UK has left the EU, the FCA can now approve their own rules regarding the regulation of financial activity and consumer protection. This means the rules in the UK may not continue to line up with the expectations of the countries within the EU. Without the assurance that its own standards are in place to protect EU residents, the EU does not permit passporting for UK financial firms.
What would be the implication of continuing loans for non-UK residents?
To continue offering financial services within the EU the Credit Union needed to either establish a regulated business within the EU or apply for a license under the domestic licensing regime of each individual country. It should be noted that these licenses are not available within all EU countries and thus these countries could have more multifaceted requirements or may not offer options to conduct business to 3rd party countries such as the UK.
Obtaining licenses within the EU is complex and costly as the Credit Union would have to meet the regulatory requirements of each of the 27 countries. The cost of gaining a license is difficult to quantify as it is not as straight forward as paying a fee for a license. Legal expertise would be required to interpret and implement the legislation of foreign countries. As such the Credit Union would have to acquire legal support to navigate the complexities of each country’s regulatory regime. Policies and procedures would also have to be reviewed to ensure they aligned with each of the countries regulatory expectations. This had the potential to mean following a different process for each country involved.
Doing what is best for the wider membership…
The Credit Union has a low number of members living outside the UK with very few applying for loans. Due to the complexity and cost associated with continuing to offer loans to members who were non-UK residents, as well as the low level of interest in the product from these members, it was not considered viable for the Credit Union to pursue licenses in the EU.
The Credit Union is a self-sufficient entity whereby profits made are used to run the business, sustain healthy levels of capital, and surplus profits being shared back with members. The potential added cost of offering loans throughout the EU was deemed not beneficial for most members, who reside in the UK. It is our duty as No1 CopperPot Credit Union to serve the needs of our members and sometimes this means making difficult decisions. We hope this helps to better understand the reason behind why this decision has been taken.
Again, we would like to offer our sincerest apologies to all of our members who are affected by this or who may be in the future.