The Government recognises the important role of Credit Unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions. The Commission on Credit Unions was established to review the future of the credit union movement and to make recommendations in relation to the most effective regulatory structure for the sector. The Commission took into account credit unions’ not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect depositors’ savings and financial stability. The Commission recognised that credit unions aim to provide for the economic and social goals of members and wider local communities. The Commission noted that credit unions are niche players in the retail financial services industry and that there is an opportunity for the development of services by credit unions as a mutual alternative to the two pillar banks.
Section 48 of the Credit Union Act 1997 facilitates the provision of additional services to members. This section provides for an application process whereby credit unions may apply to the Central Bank to be allowed to provide additional services. Some services are exempted from this process and can be provided by credit unions at present. These include ATM services, money transfers and third party payments.
The Commission on Credit Unions recommended that a new regime for the provision of additional services should be developed within the context of the tiered regulatory approach set out the Report. Credit unions in Tier 1 would be able to provide certain exempted additional services, while tier 2 and 3 would be able to offer a larger range of services. Under the Credit Union Bill 2012, the Central Bank will be able to exempt certain services from the additional services requirements set out under section 48. The Bill also provides that decisions to provide new services can be taken by the board of directors, rather than having to be decided at a general meeting of the members. Section 48 (7) as amended by the Bill provides that the Bank may set out the requirements that credit unions would need to comply with in relation to the provision of certain services.
Credit unions already have access to payments infrastructure, via providers such as BOI, AIB and BNP. I am aware that the Irish League of Credit Unions is seeking to enter this market on a commercial basis via its Credit Union Service Organisation for Payments (CUSOP) project.
The latest ILCU Annual Report sets out the details of this project, which requires authorisation from the Central Bank. However, this is a commercial project from ILCU and credit unions will have to decide for themselves whether to get involved.
I do not propose to comment on matters of a commercial nature such as this given that it is subject to authorisation by the Central Bank.
