Second FCA co-op and bencom consultation – tell us what you think

14th Jul 2015

The Financial Conduct Authority (FCA) has now published a second consultation on its registration function under the Co-operative and Community Benefit Societies Act 2014, and the Community Shares Unit (CSU) would be keen to hear your thoughts.

Following its initial consultation last year, the FCA has produced an update which focuses on three issues – interest rates, definitions of co-operative forms and its Names policy.

The CSU is most interested in the first section on rates of interest payable on shares. Overall, the guidance is more closely aligned with CSU best practice guidance on interest rates, as set out in the Community Shares Handbook. In particular, the recognition that societies should set a maximum rate and then treat it as a post-profit, discretionary operating expense. However, we feel the section fails to acknowledge that the FCA’s current guidance tends to encourage societies to base interest rates on a risk-reward computation, which often leads to higher stated returns in offer documents that challenge the underlying principle of limited return on capital.

We will be sharing a draft submission by the end of July to provide a fuller view of the CSU’s position. However, we are interested to hear from practitioners and enterprises to help inform our own views. 

The consultation closes on 14th August.