I thank the Senator for raising this matter and agree with his remarks about the good work of the credit union movement currently and in recent years. I think I have some good news for him. I have noted the points he has raised and will relay them to the Minister for Finance, Deputy McCreevy, with whom I will discuss the matter in the next few hours. I would also like to apologise on behalf of the Minister who would like to take this debate but, unfortunately, is not able to do so.
Before outlining the Minister's position, I draw together the numerous background strands to the issue which the Senator has raised. Section 3(2) of the Consumer Credit Act 1995 excludes credit unions from its scope. This means, inter alia, that they are not bound by those provisions which relate to advertising or credit arrangements which derive mainly from the 1987 consumer credit directive.
Earlier this year the European Commission issued a reasoned opinion which found that Ireland, by excluding credit unions from the scope of the 1995 Act, had failed to transpose the directive correctly. While it may be possible to argue against some of the Commission's conclusions, it is unlikely that a full and successful defence of the transposition could be mounted. In any case, the Commission made a proposal for a new directive on consumer credit in 2002 which reflects its policy for further harmonisation of EU consumer protection regulations in financial services. The proposal does not allow scope for any similar exemption for credit unions, although some member states, including Ireland, will seek to have it take account of their needs and circumstances in the course of the negotiations which have yet to take place.
At this stage it is not possible to predict what will be contained in the directive or when it will be adopted but it is reasonable to assume that some revision of the relevant Acts will have to take place. Although the Consumer Credit Act does not apply to credit unions, the fact that their activities and rules have to be in accordance with the Credit Union Act 1997 provides a substantial measure of consumer protection for their customers.
As the Senator will be aware, policy responsibility in respect of both credit unions and consumer credit matters recently passed to the Minister for Finance with the coming into force of the Central Bank and Financial Services Authority of Ireland Act 2003. The post of Consumer Director is specifically provided for within the structure of the single regulatory authority established under the Act. The director exercises important consumer protection powers under the Consumer Credit Act and other Acts. In recognition of the unique role played by credit unions in society, a separate statutory post of Registrar of Credit Unions is also provided for in the Act.
This is the background against which measures to implement the 1987 EU directive on credit unions must be considered. Obviously, repeal of the exemption provision to bring them within the full scope of the Consumer Credit Act is one option. However, the Minister's preference is for an approach which would recognise and be supportive of the uniqueness of credit unions while addressing the appropriate regulatory and consumer protection requirements which arise from the directive. He has accordingly asked his Department to explore the possibility of using or expanding some of the existing arrangements under the Credit Union Act to accommodate the requirements of the directive. The development and implementation of suitable measures based on this approach will require the co-operation and assistance of the credit union movement and the regulatory authority, as well as acceptance by the European Commission.
I will be happy to keep the Senator informed of developments if he contacts the Minister for Finance's office.
