Dáil Éireann Debate, Monday - 11 September 2017
166. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to the comments recently by a person (details supplied) regarding credit unions lending their reserves to approved housing bodies in view of the considerable funds credit unions have on deposit in banks here; his plans to ensure credit union deposits are put to a more productive use in the economy; and if he will make a statement on the matter. [38041/17]
View answerMy role as Minister for Finance 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 at the Central Bank is the independent regulator for credit unions. Within its 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.
I have been informed by the Central Bank that in line with ensuring that regulations are kept up to date and appropriate, the Central Bank is reviewing the investment regulations for credit unions. This review is being undertaken in the context of the following legislative provisions:
- the Central Bank’s statutory mandate to regulate and supervise credit unions with a view to ensuring the protection by each credit union of the funds of its members and the maintenance of the financial stability and well-being of credit unions generally;
- the objects of credit unions set out in the 1997 Act; and
- the legislative requirement, set out in section 43 of the 1997 Act, for credit unions to ensure investments do not involve undue risk to members’ savings.
Under the existing regulations credit unions are permitted to invest in a range of specified investment classes which includes government securities, deposits and bank bonds and collective investment schemes made up of these instruments. Investments in these classes of investments are subject to specified maturity and concentration limits. The Central Bank is reviewing the regulations to consider whether it is appropriate and prudent to facilitate investment by credit unions in other investments, such as for example social housing, by broadening the permitted investment classes in the regulations.
Following this review of the investment framework for credit unions, the Central Bank published consultation paper 109 “Consultation on Potential Changes to the Investment Framework for Credit Unions” (CP109) on 11 May 2017. CP109 sets out potential changes to the investment framework for credit unions, along with a Regulatory Impact Analysis (RIA), and sought views from credit unions and other sector stakeholders on the potential changes outlined, including the potential for credit unions to make investments in approved housing bodies.
If regulations provided for investment in social housing each individual credit union would be required to make an independent decision on whether or not it would provide such funding. Credit unions, in investing in long term investments, need to accommodate the short term nature of their funding (member deposits) and related asset liability matching and liquidity considerations. CP109 identified potential risk and risk mitigants for investments in approved housing bodies and asked for feedback on the appropriateness of credit unions undertaking such an investment. The consultation period closed on 28 June 2017 and the Central Bank has received 74 submissions from a broad range of respondents. The Central Bank will consider the entirety of the submissions received prior to finalising changes to the investment framework.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to continue to support a strengthened and growing credit union movement.
