Dáil Éireann Debate, Wednesday - 18 November 2015
65. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding credit unions and the use of surplus funds; and if he will make a statement on the matter. [40765/15]
View answerThe issue of credit union investments is a matter for the Registrar of Credit Unions at the Central Bank 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.
Section 44 of the Credit Union Act, 1997 provides that a credit union may establish a special fund to be used by the credit union for such social, cultural or charitable purposes (including community development) where it is approved by a resolution passed by a majority of its members present and voting at a general meeting. Funds established under section 44 do not require the approval of the Central Bank.
The Central Bank has informed me that it is supportive of such initiatives by credit unions provided they fall within the provisions of section 44. These provisions include a requirement that funds paid into such a special fund can only be paid out of the annual operating surplus of a credit union and that no funds may be paid into such a special fund unless adequate provision has been made out of the annual surplus to cover all current and contingent liabilities and to maintain proper reserves. The payment of funds into the special fund should not affect the financial stability of the credit union. In addition section 44(3) of the 1997 Act specifies that the amount of funds which may be paid out of the annual operating surplus into such special fund shall not exceed 0.5% of the value of the credit union's assets. Where an individual credit union intends to establish such a fund, the Central Bank informs me that it would expect the credit union to also take account of the need to ensure the protection of the funds of its members.
While section 44 is not being replaced or amended, the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012, when commenced, will replace, amend or supplement certain existing sections of the 1997 Act which will, in effect, remove some of the requirements (including limits) that currently exist in certain sections and will provide regulation making powers to the Central Bank.
The power to make regulations in relation to investments in projects of a public nature is specifically referenced in the legislation and therefore such investments could be facilitated by future regulations, where appropriate, when specific proposals are formed by the credit union sector. The Central Bank will be engaging with the credit union sector in the coming months with a view to gaining a better understanding of how credit unions want to develop their business model and to identify whether any changes are required to the regulatory framework to facilitate prudent development. The Central Bank is open to considering well thought through business proposals in this area including the type of regulations that would be required to facilitate proposals.
The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to continue to support a strengthened and growing credit union movement.
