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.
I have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.
The Registrar of Credit Unions informs me that currently about 51% of all credit unions are subject to lending restrictions. Lending restrictions are, in most cases, intended to be short-term in nature and kept in place until the credit union has addressed the issues giving rise to the particular concerns.
Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction. In the majority of cases, the maximum individual loan size is in excess of €10,000 as detailed in the table below.
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As at 19 June 2015
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|
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Maximum Loan Size Restriction
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Number of Credit Unions
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0-€9,999
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4
|
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€10,000-€19,999
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49
|
|
€20,000-€29,999
|
108
|
|
€30,000-€39,999
|
5
|
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€40,000 and above
|
17
|
|
Total
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183
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In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, may apply for a review of their lending restriction. A communication has been issued to all relevant credit unions outlining the process for the review of lending restrictions and requested them to indicate by 31 March 2015 whether they intend making an application for a review of their lending restriction or not. The closing date for receipt of applications to review lending restrictions under this initiative is 30 September 2015.
Separately, I have introduced legislative change whereby, as of 1 August 2013, regulatory directions are appealable to the Irish Financial Services Appeals Tribunal.
The safety of members' savings and the security of the credit union sector as a whole are priorities for this Government and I have, on a number of occasions, highlighted the Governments' recognition of the important role of credit unions as a volunteer co-operative movement in this country and also the importance of getting lending going in the economy. However, the issue of lending needs to be constructively considered in order to ensure a viable credit union sector into the future.
