Dáil Éireann Debate, Tuesday - 9 November 2021
85. Deputy Jackie Cahill asked the Minister for Finance if he will report on the implementation of the Programme for Government commitments relating to credit unions; and if he will make a statement on the matter. [54372/21]
View answer92. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to enable the credit union movement to grow as a key provider of community banking in the country. [54422/21]
View answer148. Deputy Aindrias Moynihan asked the Minister for Finance if he will report on his recent engagements with the credit union sector. [54381/21]
View answerI propose to take Questions Nos. 85, 92 and 148 together.
The Programme for Government includes a number of commitments in relation to the credit union sector that the Government is progressing.
The Review of the Policy Framework is now at an advanced stage.
Stakeholder Engagement
Since September 2020, the Department has held extensive engagement with credit union representative bodies to seek their feedback.
In total, Minister Fleming has held 23 meetings with credit union stakeholders this year including representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee and the Registrar of Credit Unions to gather further information to help inform the next steps of the review.
We intend to issue proposals emanating from the review for consultation with stakeholders shortly. This consultation will involve meeting with representative bodies and other stakeholders, a commitment made in my recent engagements.
In terms of supporting and enabling the sector to grow and expand, the following are some recent developments in relation to lending and investment regulations, SME lending, access to finance for retrofit, additional services and investment in Approved Housing Bodies (AHBs). These developments highlight the potential of the sector to fulfil a role in relation to community banking.
Review of Lending and Investment Regulations
The Central Bank has in recent years completed reviews of both the lending and investment frameworks. Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in additional SME and mortgage loans, with further lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. The Central Bank has informed me that two credit unions have been approved to avail of the 15% combined lending limit for house and business loans.
As at June 2021, credit unions had a combined mortgage and SME loan book of circa €372 million, an increase of 18% year-on-year.
The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including Tier 3 Approved Housing Bodies (AHBs).
I am pleased to share with the Deputy that two credit union backed funds have received approval from the Central Bank. Credit unions will be able to invest up to €900 million in these regulated funds, which will subsequently lend to Approved Housing Bodies (AHBs). This will provide an additional funding channel for AHBs who have a large role to play in the recently announced Housing for All Action Plan.
SME Lending
Nineteen credit unions, supported by ILCU, CUDA and Metamo, were approved in early 2021 by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.
SME lending has grown 5.6% year on year to end June 2021.
Access to Finance for Retrofit
The Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.
Additional Services
The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 62 credit unions have been approved to provide current accounts.
Other than member savings and lending, in order to provide “additional services”, a credit union must be approved by the Central Bank to provide the additional services. The Central Bank has prescribed a list of exempt services which may be provided without approval. It is undertaking a technical review of the Exempt Services Schedule to ensure that the services listed reflect the current financial services landscape. The Central Bank will commence a public consultation process during Q4 2021 – seeking views from interested stakeholders on the proposed changes arising from this review.
