Thursday, 5 July 2012

Questions (36, 37)

Gerry Adams

Question:

28 Deputy Gerry Adams asked the Minister for Finance if he will provide an update on the application of lending restrictions on credit unions by the Financial Regulator; and if he will make a statement on the matter. [32747/12]

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Written answers (Question to Minister for Finance)

The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for credit unions. Within his independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. As Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. The Registrar of Credit Unions advises me that in order to protect the savings of members in credit unions and ensure that credit unions focus on such risks when making lending decisions, lending restrictions have been placed on a number of credit unions. The number of lending restrictions has increased as the number of credit unions experiencing a deterioration in their financial position has increased. The individual credit union lending restrictions currently in place are reviewed on a regular basis to determine whether they are still set at appropriate levels.

The Registrar has advised that currently about 57% of all credit unions are subject to lending restrictions. Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction. Of the credit unions with lending restrictions, over 67% can lend €20,000 or more to an individual member.

Less than 4% of credit unions are restricted to issuing loans of less than €10,000 to an individual member, and less than 1% of credit unions are restricted to issuing loans of less than €5,000 per member. Commercial lending restrictions apply to approximately 40% of credit unions.

Proposed Legislation

Caoimhghín Ó Caoláin

Question:

29 Deputy Caoimhghín Ó Caoláin asked the Minister for Finance if he will provide an update on the forthcoming legislation on the regulation of credit unions; when he expects the legislation to be brought before Dáil Éireann; and if he will make a statement on the matter. [32746/12]

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The General Scheme of the Credit Union Bill 2012 was approved by Government on June 26 and published on June 28 following consultation with the Commission on Credit Unions and engagement with key stakeholders. The General Scheme has been forwarded to the Office of the Attorney General for formal drafting. It is also being referred to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform and to the ECB for an opinion, in accordance with EU Treaty requirements. The General Scheme which is based on recommendations set out in the Report of the Commission on Credit Unions, covers five main areas as follows:

Prudential regulation: including reserves, liquidity, lending and risk management;

Governance: dealing with the roles and responsibilities of the Chair, Board, Manager and Board Oversight Committee;

Stabilisation: provision of support to credit unions that are viable but undercapitalised;

Restructuring: restructuring via transfers, mergers and amalgamations on a voluntary, incentivised and time-bound basis;

Amendments to the Credit Union Act 1997: These are important miscellaneous amendments to deal with appeals for directions, administrative sanctions, additional services and other matters.

The Credit Union Bill 2012 is due to be published during Q3 in accordance with the structural benchmark under the EU-IMF Programme.