Pearse Doherty
Question:143. Deputy Pearse Doherty asked the Minister for Finance if effective and proportionate regulations will be reintroduced further to section 43(5) of the Credit Union Act 1997. [8155/18]
View answerTuesday, 20 February 2018
Questions (143)
Written answers
Section 43 of the Credit Union Act, 1997 outlines the legislative requirements in relation to credit union investments. It states that a credit union shall manage its investments to ensure that those investments do not, taking account of the nature, scale, complexity and risk profile of the credit union, involve undue risk to members' savings and for that purpose, before making an investment a credit union shall assess the potential impact on the credit union, including the impact on the liquidity and financial position of the credit union. Section 43(3) provides the Central Bank with the power to make regulations in relation to investments.
The current investment regulations for credit unions are contained in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. In 2017, the Central Bank undertook a review of the investment framework for credit unions. In May 2017, Consultation Paper 109, CP109, was published which consulted on a number of potential changes to the investment framework. Following completion of a public and statutory consultation process, the Central Bank published a feedback statement on CP109 and amending investment and liquidity regulations for credit unions. On 1 March 2018, new investment regulations will be introduced for credit unions through the commencement of the Credit Union Act 1997 (Regulatory Requirements) (Amendment) Regulations 2018. These new investment regulations introduce three additional investment classes for credit unions, supranational bonds, corporate bonds and investments, in tier 3 Approved Housing Bodies, AHBs, along with associated limits and requirements. Investment in tier 3 AHBs has a differentiated concentration limit dependent on the asset size of the credit union.
The Central Bank has informed me that it views that these new regulations are effective and proportionate for credit unions and that there is a need for credit unions to fully understand the risks associated with all investments, ensure that they are in line with the risk appetite of the credit union and comply with all legislative and regulatory requirements.
The Central Bank has indicated that it will undertake and publish analysis of credit union sector investments, two years post commencement of the amending regulations to assess and analyse the actual impact which the changes to the investment framework have had.