I can advise the Deputy that Section 35 of the Credit Union Act 1997 as amended by the Central Bank Reform Act 2010 provided for the making of loans by a credit union and provided the Central Bank with certain regulation making powers. The legislation set out limits on lending over 5 years and over 10 years. Following commencement of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) these “Section 35” restrictions in relation to long-term lending are set out in Central Bank regulations which commenced on 1 January 2016.
The Credit Union Advisory Committee, CUAC, in its 2016 report, recommended a full review of lending limits and concentration limits, including the basis of the calculation of the limits together with the liquidity requirements attaching to same. It was acknowledged that any changes arising would need to be assessed in conjunction with the risk profile of credit unions together with an assessment of skills, capabilities and asset and liability management.
To that end, the CUAC Report Implementation Group, which was established to implement CUAC’s recommendations, submitted a scoping paper to the Central Bank in November 2017. The paper details a range of proposals for consideration in the Central Bank review of Section 35 which could provide for a material increase in long-term lending for those credit unions that would have the capability to do so. The paper provides a range of considered proposals which would, if implemented, offer a roadmap for increasing long-term lending capacity in the credit union sector, while recognising the potential risks involved.
I recently wrote to the Governor of the Central Bank to outline my strong support for this very important matter being progressed in early 2018. I am advised that the Central Bank has undertaken a preliminary review of the paper provided by the Implementation Group and that work plans for 2018 reflect the Registry of Credit Union’s intention to progress this matter during the year.