The Banking Act 1987 (Exempt Transactions) Regulations 1997

NOW THIS DEED WITNESSETH AND IT IS HEREBY DECLARED as follows:

15.—(1) This clause applies where the Board consider that a Participating Society is in default by reason of:—

(a)any failure to observe the provisions of the Code of Practice; or

(b)any failure to comply with the credit limits stipulated in the Code of Practice; or

(c)any failure to make any supplementary contribution required by the Union pursuant to clause 5(3) above within such time as may be stipulated by the Board.

(2) Where this clause applies then if with respect to the Participating Society the Board considers it expedient to do so having regard to the interests of persons who have deposited money with or who have withdrawable shares in such Society the Board may by notice (an “Expulsion Notice”) to the Participating Society exclude that Society from Participation in the Scheme

• And the Second Schedule to this Scheme shall have effect in relation to the giving of an Expulsion Notice under this clause.

(3) Nothing in paragraph (2) above shall prohibit recovery by the Board or the Union of any unpaid supplementary contribution or other monies due to the Scheme.

(4) Upon receipt of an Expulsion Notice under paragraph (2) above a Participating Society shall, save under the protection of Part II of the Banking Act 1987 cease to accept new Deposits and shall within the period of 9 months from the date of the Expulsion Notice either (i) repay all Deposits (with the exception of withdrawable share capital) held by it or (ii) secure protection for those Deposits (with the exception of withdrawable share capital) under Part II of the Banking Act 1987. At the expiration of the said period of 9 months from the date of the Expulsion Notice and subject to the due performance of (i) or (ii) above within that period the Society shall cease to be a Participating Society, and upon such due performance as above within the said period of 9 months there shall be repaid to such Society out of the Fund such sum (if any) as the Board shall in its absolute discretion consider appropriate provided always that no such repayment shall be made until after the expiration of the said period of 9 months. Without prejudice to the application of clause 6 hereof (and the provisions of Clauses 7 and 8) in the case of a Participating Society which becomes insolvent during the said period of 9 months, if such Society shall not have duly performed (i) or (ii) above within the said period of 9 months Clause 6 hereof (and the provisions of Clauses 7 and 8 so far as applicable) shall apply to the depositors of such Society who have not had their Deposits (with the exception of withdrawable share capital) so repaid or secured as if that Society had become insolvent, but so that any payments thereunder shall be made within 6 months after the end of the said 9 month period.

(5) A Participating Society which is aggrieved by a decision under Clause 15(2) above may within 14 days after the day on which it received the Expulsion Notice appeal against the decision to an Appeal Tribunal (the “Appeal Tribunal”) comprising the General Secretary for the time being of the National Association of Co-operative Officials the Chairman for the time being of the United Kingdom Co-operative Council and a Life President for the time being of the Society for Co-operative Studies. An appeal under this paragraph shall be made by sending to the Chief Executive Officer and General Secretary of the Union a Notice of Appeal, including a statement of the grounds of appeal, written representations in support of those grounds and any documents that may be relevant for the purposes of the appeal, and the procedure for determining such an appeal shall be as the Appeal Tribunal may direct. On such an appeal the Appeal Tribunal may confirm or revoke the expulsion of the Participating Society from the Scheme, and written notice of the decision (a “Decision Notice”) of the Appeal Tribunal, stating the reasons for it, shall be given to the Participating Society and to the Board, and unless the Appeal Tribunal otherwise directs their decision shall take effect when the Decision Notice is so given.

(6) Where a Participating Society is excluded from participation in the Scheme the Board shall forthwith take all such steps as may be necessary to bring its exclusion and the consequences of such exclusion to the notice of depositors and notice of the giving of an Expulsion Notice with an explanation of the consequences thereof shall be published by the Board in the “Co-operative News” and in any other manner which appears to the Board to be necessary for informing depositors and other members of the public. For the purpose of this subclause any Participating Society which is excluded from participation in the Scheme shall at the request of the Board forthwith supply to the Board all necessary information as to the full names and postal addresses of all its members and depositors.

(7) Where a Participating Society is excluded from participation in the Scheme nevertheless the Scheme shall thereafter continue to give protection to all deposits previously taken by that Society in circumstances such that they were protected by the Scheme:—

(a)in respect of protected withdrawable share capital, and undated loan capital, for a period of nine months from the date of the Expulsion Notice;

and

(b)in respect of all other protected deposits for a period of nine months from the date of the maturity of each such deposit held at the date of the Expulsion Notice;

PROVIDED ALWAYS that no deposits taken by the Society shall be protected deposits for the purposes of the Scheme for any period during which protection for those deposits (with the exception of withdrawal share capital) has been secured under Part II of the Banking Act 1987.

• Following receipt of an Expulsion Notice a Participating Society shall thereafter continue to be fully liable for payment of all supplementary contributions required by the Union pursuant to Clause 5(3) above until such time as the Scheme has ceased to give protection to all protected deposits previously taken by that Society.

(8) Where a Participating Society is excluded from participation in the Scheme any new deposits taken by that Society thereafter shall not be protected deposits for the purposes of the Scheme.

IN WITNESS whereof this Deed has been executed by the parties the day and year first before written

• SEALED by Co-operative Union Limited

in the presence of:

• J. H. Perrow, Chairman

• D. L. Wilkinson, General Secretary

• SEALED by Co-operative Bank Limited

in the presence of:

• L. Lee, Director

• G. J. Melmoth, Secretary