Written Answers. - Registrar of Credit Unions.
Willie Penrose
Question:
192
Mr. Penrose
asked the
Minister for Finance
the reason he has failed to honour the agreement he made with the Irish League of Credit Unions whereby credit unions were to be regulated separately and distinctively in the new IFSRA; if his attention has been drawn to the fact that the registrar of credit unions is already answerable to the IFSRA board; the reason this significant change is proposed for the credit unions; and if he will make a statement on the matter.
[25654/02]
As the Deputy may be aware, the McDowell group recommended that the existing functions of the Registrar of Friendly Societies, in relation to credit unions, should be brought into the single regulatory authority proposed by the group and that a statutory position of registrar of credit unions should be established within the SRA. The group also recommended that the supervision of the credit unions by the SRA should be done in a way that would recognise and be supportive of:
The uniqueness of credit unions and would give comfort that their voluntary character would not be threatened by the establishment of the SRA while still addressing the appropriate regulatory and consumer protection requirements that arise.
In October 2000 my officials informed me that the legislative committee of the ILCU had asked if we would open consultations with them con cerning how we would envisage credit unions being regulated within a single regulatory authority. My officials indicated to me that they intended to respond to the request by outlining to the ILCU how we would envisage the McDowell proposal for a statutory registrar of credit unions might operate. I was happy for my officials to talk to the league on this basis and there were three meetings between then and May 2001.
In the course of those meetings my officials outlined proposals on how the registrar would be dealt with in the proposed legislation. No agreement was drawn up with the league regarding the provisions to be included in the Central Bank and Financial Services Authority of Ireland Bill, 2002. I accept that the league had an expectation as to the provisions that would be in the Bill, based on these meetings. The Bill as published reflected what it was told.
As regards the amendments I intend to propose on Committee Stage, credit unions have been regulated under separate legislation from the financial institutions,vis-à-vis the Credit Union Act, 1997. The Bill provides that this will continue to be the case. The functions of the Registrar of Friendly Societies under the Credit Union Act will be carried out by a registrar of credit unions within the overall framework of the regulatory authority but the basis of that regulation will continue to be the Credit Union Act, 1997. I have no intention of changing this basic position.
Both the interim Irish Financial Services Regulatory Authority, which I established in April to manage the transition to the new regulatory arrangements, and the Governor of the Central Bank, expressed reservations regarding the reporting arrangements for the registrar of credit unions within the proposed regulatory authority. Separately, the European Central Bank had expressed reservations about the autonomous position of the registrar within the overall structure. In the context of these concerns I felt obliged to look again at the provisions in relation to the registrar.
I have signalled my intention to propose amendments on Committee Stage of the Bill, which would alter the reporting relationship of the registrar of credit unions, to bring the position more fully within the framework of the IFSRA. The reporting relationship of the registrar would be similar to that proposed for the consumer director.
The changes I am proposing allow for the credit unions continuing to be regulated separately and distinctly under the Credit Union Act, 1997. Correspondence between the interim IFSRA and the ILCU has confirmed that this is the case.
I would also take issue with the implication of the question that as the Bill stands the registrar is already answerable to the IFSRA board, certainly as far as the bulk of regulatory functions are concerned. As the Bill is published, the registrar is not subject to the control or direction of the regulatory authority in carrying out or exercising the registrar's responsibilities or powers with respect to the registration of credit unions or the supervision of their affairs or activities and the proposed amendments are designed to correct this.
