In general it is proposed that 'constitutional provisions' should be contained in the Credit Unions Act in future and regulatory powers should be 'addressed' in the Financial Services Act 2008. 'Constitutional provisions' relate to the incorporation of credit unions and continuing establishment matters, in a similar way that companies law relates to the incorporation of companies, whether or not those companies are regulated entities.

The Financial Services Act 2008 prescribes the regulatory powers for most of the regulator’s licence-holders. The main changes that the Bill proposes are as follows.

• Removal of the reliance on, and link to, the International Business Structuring Organisation, so as to create a stand-alone Credit Unions Act that deals with all constitutional aspects of credit unions.
• Credit unions will be incorporated under the Credit Unions Act, but will no longer also be registered under IBSA/CUA.
• Credit unions will be required to obtain a financial services licence from the FSA under the FSA 2008.
• The Treasury may (if it deems it appropriate) establish a savings compensation to protect savings of members of credit unions.
• All members must be Isle of Man residents.
• Corporate members will be allowed, although they may not borrow from a credit union.
• Children may be members.
• Credit unions may not accept deposits (they may only accept savings).
• The FSA will be able to amend maximum savings limits (and other limits) through secondary legislation.
• Detailed provisions relating to profits, dividends, financial statements etc will largely be transferred to regulatory legislation.
• Fraud insurance provisions and powers to require information will be dealt with under regulatory legislation.
• Companies may not be converted into credit unions.
• Credit unions must make certain information available on their websites.

The Bill will not (substantially) changed certain things.

• The ‘common bond’ requirement will remain – this will be IoM residency.
• The FSA will continue to assess credit unions’ rules for suitability.
• Credit unions may borrow and lend.
• Credit unions must submit annual returns to DED (as companies do).

The closing date for comments is 25 April.