The credit union sector nationally plays an important role in providing financial services, but in doing so retains responsibility to ensure members' funds are not put at undue risk. I have been informed by the Registrar of Credit Unions at the Central Bank that in relation to lending generally, arising from their findings from on-site engagements with credit unions, the recently published Credit Union PRISM Risk Assessment Report shows many credit unions have been required to implement a range of actions to substantially improve their lending and credit risk management standards and practices.
Lending to small and medium enterprises - SMEs - is a specialist form of lending that clearly requires specific skills and expertise. In general this type of lending is viewed as high risk by the Registrar of Credit Unions and would not be appropriate for the majority of credit unions, particularly in light of the issues identified in relation to lending standards and practices.
The Commission on Credit Unions in its final Report recommended a tiered regulatory approach for credit unions. The tiered regulatory approach will see some credit unions taking on a more sophisticated business model, subject to increased regulatory requirements, which could include lending to SMEs as referred to in the Deputy's question. The Central Bank issued a consultation paper on the proposed tiered regulatory approach in order to provide an opportunity for stakeholders to set out their views across a range of issue and they are currently considering over 160 submissions received and following analysis of these submissions, will communicate with credit unions and other stakeholders in relation to the proposed next steps.