Dáil Éireann Debate, Tuesday - 1 March 2022
255. Deputy Fergus O'Dowd asked the Minister for Finance if he will respond to concerns raised by the Irish League of Credit Unions (detail supplied) in respect of their priorities going forward; and if he will make a statement on the matter. [11152/22]
View answer261. Deputy Alan Dillon asked the Minister for Finance when he expects to publish the review of the policy framework relating to the credit union sector resulting from his extensive engagement with the credit union stakeholders, including representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee and the Registry of Credit Unions; and if he will make a statement on the matter. [11529/22]
View answer265. Deputy Sorca Clarke asked the Minister for Finance the engagement his Department has had with an organisation (details supplied) regarding the review of the policy framework within which credit unions operate; when this review is expected to be completed; and if he will make a statement on the matter. [11758/22]
View answerI propose to take Questions Nos. 255, 261 and 265 together.
The Programme for Government includes a number of commitments in relation to the credit union sector. The Review of Policy Framework is in its final stages with a summary list of proposals having recently been shared with all the credit union representative bodies. A final stakeholder engagement session has been scheduled for early March. Legislative proposals arising will go to Cabinet shortly thereafter.
As part of the Review of the Policy Framework, Minister of State Fleming has conducted extensive stakeholder engagement, meeting with the representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee, the Registrar of Credit Unions and individual credit unions. The information gained from these meetings will help inform the next steps taken by Government.
In terms of supporting the sector to provide essential financial services to local communities, the following are some recent developments which highlight the potential of the sector to grow and fulfil a role in relation to community banking.
Lending and Investment
The Central Bank has in recent years reviewed both the lending and investment frameworks. Since 1 January 2020, credit unions now have a combined capacity to provide up to €1.1 billion in additional SME and mortgage loans, with further capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As of September 2021, credit unions had a combined mortgage and SME loan book of circa €387 million, an increase of 19% year-on-year.
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 three 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 AHBs.
SME Lending
Nineteen credit unions were approved in early 2021 for participation in the Covid-19 Credit Guarantee Scheme. Further, in November five credit unions were announced as participants in the Brexit Impact Loan Scheme (BILS). The BILS provides low-cost loans of €25,000 to €1.5m to eligible Brexit-impacted businesses.
In total, SME lending has grown 6.9% year on year to end September 2021. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.
Access to Finance for Retrofit
The Government significantly increased the funding available to support retrofit. My officials have been engaging with stakeholders to support increased credit union participation in retrofit loan schemes.
Other Services
Other than member savings and lending, in order to provide “additional services”, a credit union must receive approval from the Central Bank.
66 credit unions are approved to provide current accounts.
The Central Bank has prescribed a list of exempt services which may be provided without requiring approval. The Central Bank is undertaking a review of the Exempt Services Schedule to ensure that the services listed reflect the current financial services landscape. The Central Bank has commenced a public consultation seeking views from stakeholders on the proposed changes arising from this review.
