Summary
These Regulations establish mandatory 'restriction on use' rules for community benefit societies, prohibiting them from using or dealing with assets except in specified circumstances (paying members, transfers to other regulated entities like charities, community interest companies, or registered social landlords). The Financial Services Authority is empowered to issue enforcement notifications, require officers to pay compensation for losses, and direct removal of officers. The regulations also establish a regime of warning notices, decision notices, and court appeals.
Reason
This regulation imposes mandatory restrictions on how community benefit societies may use their own assets, restricting contractual freedom and imposing bureaucratic constraints that were never voted on by Parliament. The 'restriction on use' requirement dictates organizational structure through state mandate rather than allowing members to freely determine governance arrangements. The enforcement regime — including officer liability, FSA oversight, and court proceedings — adds compliance costs that deter formation and operation of these societies. The regulation restricts asset transfers to an arbitrary list of approved recipients, preventing societies from disposing of assets as members see fit. Such restrictions on property rights and contractual freedom should be a matter for the societies' own rules and member consent, not state prescription.