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London Capital Credit Union

London Capital Credit Union Deferred Shares

£10,000 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether London Captial Credit Union is a suitable investment for them in light of their own personal circumstances.

The investment to which this communication relates is a deferred share. Direct investment in deferred shares can be high risk and is very different to investment in deposit accounts or other savings product

This offer is not covered by the Financial Services Compensation Scheme.


General investment risks

The investment to which this communication relates is a deferred share. Direct investment in deferred shares can be high risk and is very different to investment in deposit accounts or other savings products. In particular, you should note that:

(a) the entire amount you pay for the deferred share is at risk;

(b) the sum you pay is only repayable to you in limited circumstances, specifically if:

i. the credit union has obtained specific regulatory permission to make the repayment; or

ii. the credit union is wound up, and there are funds remaining after all creditors, including savers and holders of subordinated debt, have been repaid;

(c) the sum you pay for deferred shares is not covered by the Financial Services Compensation Scheme;

(d) a deferred share may only be sold to a member of the same credit union and may be difficult to sell on; and

(e) investing more than 10% of your savings or net investment portfolio in deferred shares issued by a credit union, credit union subordinated debt and mutual society shares is unlikely to be in your best interests


Reputational Risks

Reputational risk if London Capital Credit Union have to reduce lending to poorer sections of society to maintain capital ratios.

Mitigation

Ensure that capital is raised through deferred shares, sub-ordinated loans and improved retained surplus.


Ability to lend

Ability to continue lending to the full range of membership, including those on low incomes

Mitigation

Further diversify membership into higher-income brackets, via new “Homeowner Loan” offered to lower-risk borrowers, increasing retained surplus and capital. Increased focus on members in paid employment, particularly using Salary Savings Schemes.


Loan defaults

Loan defaults

Mitigation

Increase the proportion of borrowers who repay by Salary Savings Schemes with marketing activity more focused on lower risk borrowers.


Regulatory Risk

Regulatory risk

Mitigation

London Captial Credit Union will keep regulators informed of progress towards increasing capital and ensure full compliance with all regulatory requirements.


Capital ratio

Capital ratio requirement, to ensure robustness

Mitigation

The offer of deferred shares, sub-ordinated loans from local authorities and increased retained surplus by boosting sales and minimising costs.


Key persons

Key Persons risk

Mitigations

London Captial Credit Union will ensure that pay and conditions are maintained at levels to retain staff. They will plan for succession of key staff and ensure staffing structures are designed to encourage knowledge sharing.

£1,0000%
Applied for to date, of
£300,000 target

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https://www.ethex.org.uk/savings--investments_16.html

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