The Commission on Credit Unions was established by Government on 31 May 2011 and has begun its programme of work. It met for the first time on 20 June 2011 and has had subsequent meetings on 24 June 2011 and 8 July 2011. The Commission will make initial recommendations on the strengthening of the regulatory framework by 30 September 2011 and will submit a final report to me, as Minister for Finance, by 31 March 2012.
Membership of the Commission is as follows:
Professor Donal McKillop (Professor of Financial Services, School of Management, Queens University, Belfast) and Member of the Credit Union Advisory Committee.
Ordinary members of the Commission on Credit Unions:
Mr. Kieron Brennan (Chief Executive Officer, Irish League of Credit Unions)
Ms Fiona Cullen (Head of Legal Department, Irish League of Credit Unions)
Mr. Billy Doyle (Management Committee, Credit Union Development Association)
Ms Eileen Fitzgerald (Senior Manager in the Citizens Information Board, with responsibility for MABS)
Mr. Eamonn Kearns (Financial Services Division, Department of Finance),
Mr. Tom McCarthy (Chief Executive Officer, Irish Management Institute)
Mr. Tim Molan (National Secretary, Credit Union Managers Association)
Mr. Robert Moynihan (Qualified Chartered Accountant and Regulatory Consultant)
Mr. James O'Brien (Registrar of Credit Unions)
Mr. Dan O'Gorman (Solicitor)
Mr. Joe O'Toole (Former Senator), and
Prof. John Wilson (Professor of Banking, St. Andrews University, Scotland)
The Government agreed the terms of reference of the Commission on Credit Unions and these are as follows:
Having regard to the commitments
in the Programme for National Government 2011-2016 to review the future of the credit union movement and to make recommendations in relation to the most effective regulatory structure for credit unions, and
under the EU/IMF Programme of Support for Ireland to design a strategy for the future evolution of the credit union sector, to assist credit unions with a strengthened regulatory framework including more effective governance and regulatory requirements and to make recommendations to the Minister on legislation to be submitted to the Oireachtas by end-2011; and
taking into account
the not-for-profit mandate of credit unions, their volunteer ethos and community focus, paying due regard to the need to fully protect depositors' savings and financial stability,
the comprehensive strategy to enhance the viability of the credit union sector prepared under the EU/IMF Programme of Support for Ireland;
international best practice in the structure, organisation and regulation of credit unions or analogous entities; and
the strengths and weaknesses of the sector as set out in work done in the Strategic Review of the Credit Union Sector in Ireland;
the Commission on Credit Unions is invited to:
1. Define the role of credit unions in the context of a restructured financial services sector. This will focus on the credit union as a cooperative, owned and run by its members and providing its members with the financial services that they require. Consideration will also be given to the role of the credit union in relation to the community in general. In particular, the objects of a credit union as set out under section 6 of the Credit Union Act 1997 will be examined including the function of the common bond in the context of modern financial services systems. The Commission should also consider the question of the prudential supervision of loan societies and credit cooperatives registered under the Friendly Societies Act 1896 and the Industrial and Provident Societies Act 1893 that engage in taking deposits from and providing loans to their members and make recommendations in this regard.
2. Propose a model for modern credit unions and define the structure/parameters within which financially viable credit unions will operate. At the same time, the Commission will examine how credit unions may continue to provide the services required by their members while meeting regulatory requirements sufficient to protect the savings of depositors and the financial stability of the credit union sector as a whole. This should examine how the size of a credit union, the variety and complexity of the services it provides and the competencies of its management and staff influence its viability. The question of credit unions competing with the larger financial institutions should be studied.
3. Options for restructuring. The Commission will make recommendations on the possibility of voluntary consolidation or restructuring of the credit union sector over time, recognising the need to maintain local presence and taking into account the not for-profit mandate, the volunteer ethos and community focus of credit unions. In this consideration, due regard must be given to the need to protect depositors savings and financial stability. Central Bank of Ireland proposals in relation to possible restructuring of some credit unions should be examined and recommendations made to the Minister for Finance as these may arise over the term of the Commission. The Commission is required to engage with the Department of Finance, make recommendations and exchange information on legislative proposals during the course of its deliberations.
4. Shared services. The Commission will examine the options for groups of credit unions to share services on a formal basis and the extent to which this model is appropriate. The Commission should consider which services are most suitable for delivery by a separate entity, e.g. purchasing, auditing, compliance, credit control, legal, marketing, human resource management, administration and training. Progress in relation to the introduction of modern information technology and management information systems for and in credit unions will be examined and recommendations made in this regard.
5. Determine and set out the basic governance and regulatory requirements that must be met. The Commission will focus on a set of benchmarks that credit unions should meet if they are to be registered to operate in the State. These benchmarks should include capital requirements, sizes of loan books and of loans, competencies of directors and staff, investments policy, fitness and probity and governance standards. Recommendations will be made in relation to management reporting arrangements both internally and with the Registry of Credit Unions.
6. Make recommendations for legislative change. The Commission will examine the existing legislation and in particular the Credit Union Act 1997 and make recommendations on changes required to implement their findings. The Commission should make initial recommendations required to strengthen the regulatory framework of credit unions by 30 September 2011. A final report should be submitted to the Minister for Finance by 31 March 2012.