The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for credit unions. Within her 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 it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns about the operation of these individual credit unions and the resultant risk to members' savings. The number of lending restrictions is a reflection of the Registrar's concerns about lending practices in the sector.
The Registrar has advised me that currently about 58% of all credit unions are subject to lending restrictions. This compares to a corresponding figure of 57% at the end of 2012. 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 69% currently, which compares with 68% at the end of 2012, can lend €20,000 or more to an individual member, which is a sizeable amount and should cover most circumstances.
Of the credit unions with maximum individual loan size restrictions, 60% can lend from €20,000 to just under €30,000, 4% can lend from €30,000 to just under €45,000, 4% can lend from €45,000 to just under €75,000 and less than 2% can lend from €75,000 up to €100,000. Fewer than 2.6% of credit unions are restricted to issuing loans of less than €10,000 to an individual member. The figure in 2012 was fewer than 2.5%. While fewer than 1% of credit unions were restricted to issuing loans of less than €5,000 per member in 2012, no credit union is currently similarly restricted. These are the cases where the Registrar of Credit Unions has the more significant concerns in terms of risk to members' savings.
The Registrar has also advised that individual credit union lending restrictions currently in place are reviewed on a regular basis to determine whether they are still set at appropriate levels. Lending restrictions are typically given effect by regulatory directions. As from 1 August 2013 regulatory directions are appealable to the Irish Financial Services Appeals Tribunal.