Credit Union (Amendment) Bill 2021: First Stage

I move:

That leave be granted to introduce a Bill entitled an Act to amend certain provisions of the Credit Union Act 1997, in particular, to provide for the amendment of the objects of credit unions to include the provision to its members of additional financial services as are for their mutual benefit; to provide for the establishment of a Credit Union Policy Committee; and to provide for miscellaneous matters relating to credit unions.

As a long-term member of and advocate for credit unions, I am pleased to have the opportunity to introduce the Credit Union (Amendment) Bill 2021. It is also timely as tomorrow is world credit union day. The first objective of this Bill is to amend certain provisions of the Credit Union Act 1997 and in particular, to provide for the amendment of objects of credit unions, to include the provision to its members of additional financial services as are for their mutual benefit. The Credit Union Act 1997, as it stands, largely limits the role or objects of credit unions to accepting savings and providing loans. There is an additional list of services credit unions can provide approved by the Central Bank and subject to conditions. However, this list is outdated in the rapidly changing world of financial services provision. In order for any credit union to expand its range of services outside of this list, such as providing current account services, specific Central Bank approval is required for each credit union.

This Bill would allow a credit union to provide a greater range of financial services to its members, such as current accounts, where the following conditions are met: that such financial services are for their mutual benefit, as determined by the board of the credit union and that the credit union in question would hold, where applicable, any and all authorisation required under the relevant financial services legislation. That last point is crucial because it makes it crystal clear credit unions must operate fully and wholly in compliance with the relevant legislation pertaining to the financial services they wish to offer. Whether a credit union can offer a regulated financial service to its members should not be at the sole discretion of the Central Bank.

The second objective is to provide for the establishment of a credit union policy committee. The purpose of the committee would be to review the impact of Central Bank policy on credit unions and provide feedback to the Central Bank on its policy development process. This would be a formal consultation process and the Central Bank would be expected to have regard to the deliberations of the policy committee. The committee would be set up by the Minister and should include persons with expertise and experience in the sector. Such a committee would mirror the Credit Union Advisory Committee, CUAC, which is already set up to advise the Minister.

The third objective of the Bill is to provide for miscellaneous matters relating to credit unions. First, it would require the Central Bank obtains the consent of the Minister for Finance when prescribing the minimum regulatory reserve requirement for credit unions. Currently, the Central Bank prescribes the minimum regulatory reserve ratio, which is 10% of the assets of a credit union. It is worth noting the Irish figure of 10% for credit unions is much more than what is required from high street banks in Ireland and significantly more than credit unions in Australia, the US or Canada. Whatever the figure, the Minister for Finance must give his or her consent to setting that figure. It is also proposed that when amending a common bond, the Central Bank shall have regard to the common bond of other credit unions and ensure there is no overlap. It is really important the unique nature of the common bond should not be arbitrarily altered.

Finally, it is proposed the Central Bank will administer the system of regulation and supervision of credit unions in an appropriate way and with a view to the protection of the community-based and volunteer ethos of credit unions. This is crucial because it is what differentiates credit unions from other financial institutions. They are not-for-profit and member-owned financial institutions and are run according to a volunteer ethos. This must be recognised and taken into account by the Central Bank in all its dealings with credit unions.

Is the Bill being opposed?

Question put and agreed to.

Since this is a Private Members' Bill, Second Stage must, under Standing Orders, be taken in Private Members' time.

I move: "That the Bill be taken in Private Members' time."

Question put and agreed to.