38.—(1) A credit union may charge interest on loans made to its members under section 35 subject to the following conditions—

F103[(a) the interest on a loan shall not at any time exceed the rate, specified in the order made under subsection (3) applicable to—

(i) the credit agreement under which the loan is made, or

(ii) where there is no credit agreement, the loan;]

(b) F104[…]

(c) F104[…]

F105[(2) If a credit union knowingly charges or accepts interest on a loan at a rate greater than that permitted under this section—

(a) all the interest agreed to be paid by the member shall be deemed to have been waived by the credit union; and

(b) any interest paid on the loan shall be recoverable summarily by the member (or his personal representative) as a simple contract debt.]

F106[(3) The Minister may, after consultation with the Advisory Committee and such other body as the Minister considers appropriate in the circumstances, by order specify a rate of interest for the purpose of subsection (1)(a).

(4) An order made under subsection (3) shall apply to a credit agreement entered into, or, where there is no credit agreement, a loan made—

(a) after the date on which the order comes into operation, and

(b) before the date, if any, on which the order next made under subsection (3) comes into operation.

(5) The Minister shall have regard to the following when making an order under subsection (3):

(a) the interest rates charged in respect of loans by credit institutions and other providers of credit;

(b) the interest rates payable by credit unions on deposit accounts and in respect of other sources of funding for loans;

(c) the need to avoid distortions in competition between credit unions, credit institutions and other providers of credit;

(d) the financial stability and well-being of credit unions generally.]