Social Economy Unit

Credit Unions

Scottish Credit Union SGEI Approval Scheme

Introduction

The European Commission (EC) State Aid de minimis rule has previously meant that the amount of public funding which any individual Credit Union can receive has been limited to €100,000 over a rolling 3 year period.

However, in April 2005, the Scottish Executive secured a ruling from the EC which meant that Scottish public funders may choose to fund Credit Unions above the de minimis limits if certain conditions are met.

It should be noted that the EC State Aid de minimis rule has been increased from €100,000 to €200,000 over a 3 year fiscal period.

More information is available on the de minimis rule from the Europa website

The Scottish Executive has since developed the SGEI Approval Scheme where new or existing Credit Unions (authorised and registered with the Financial Services Authority (FSA)and that can prove financial exclusion within their common bond) can be approved to carry out financial inclusion activities as a Service of General Economic Interest (SGEI).

An approved Credit Union may then receive public funding to compensate it for the cost of providing any one or more of four financial products. (Flexible Credit based on ability to repay, Credit Union Savings Accounts, Credit Union Budgeting Accounts and insurance).

Public Funding

Once a Credit Union is approved by the Scottish Executive to provide one or more of these products as an SGEI, it may be able to apply for public funding from the organisations noted below to compensate it for the extra costs incurred in providing this service:

• Scottish Ministers (Scottish Executive & Communities Scotland)

• Scottish Local Authorities

• Scottish Enterprise

• Highlands and Islands Enterprise

This funding may be in excess of the de minimis limits but care must be taken to ensure that only the costs required related to the product are allowed and that no overcompensation occurs.

It should be noted that approval from the Scottish Executive will not guarantee funding. This will be a decision for each public funder to make. Only Credit Unions who can demonstrate that they are FSA compliant, and provide evidence of financial exclusion within their common bond will be granted approval.

Once approved, Credit Unions can receive funding under this scheme for up to 3 years at which stage their approval status will be reviewed. This scheme itself will run for 5 years from the date of the Commission’s decision, ie to April 2010 at which stage it will be reviewed, and a subsequent scheme may be developed.

Scottish Credit Union SGEI Fund

Credit Unions seeking funding from the Scottish Credit Union SGEI Fund which is administered by Communities Scotland must have received approval under the Scottish Credit Union SGEI approval scheme. Applications for the Scottish Credit Union SGEI approval scheme and the Scottish Credit Union SGEI Fund can be made at the same time.

How to apply

To apply to the fund read:

• Scottish Credit Union SGEI Approval Scheme Guidance for Scottish Credit Unions and Public Funders

And complete the following application forms using the guidance notes:

• SGEI approval scheme application

• SGEI approval scheme Annex E

• SGEI approval scheme Annex F

• SGEI approval scheme Annex G

• SGEI approval scheme checklist

Applicants must be established Scottish Credit Unions that are at an advanced stage of developing an SGEI product or products.

Communities Scotland will normally reach a decision on an application within six weeks of receiving a completed application.

Applicants can submit an electronic version of the completed application to