Dáil Éireann Debate, Thursday - 26 February 2015
72. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the proposed changes to the regulation of community-based credit unions; and if he will make a statement on the matter. [8685/15]
Amharc ar fhreagraAs Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
On 27 November 2014, the Central Bank issued a consultation paper CP88 entitled 'Consultation on Regulations for Credit Unions on commencement of the remaining sections of the 2012 Act'. The Central Bank has provided a 3 month consultation process to provide an opportunity for stakeholders to set out their views across a range of issues, with a closing date for submissions of 27 February 2015. Following review of all submissions received the Central Bank has informed me that a feedback statement outlining the information received, the Central Bank's response and the final regulations for credit unions will then be published. All submissions received will be published on the Central Bank's website.[1] I am satisfied that the safety of members savings and the security of the credit union sector as a whole are central to any actions taken by the Registrar of Credit Unions.
The draft lending regulations set out in CP88 define the categories of lending a credit union can undertake but do not limit credit unions to charging interest rates based on the category of lending i.e. a credit union may charge different interest rates for loans within the same category of lending. Under the draft lending regulations where a credit union is providing home improvement loans these may be provided as personal loans or as house loans. Where such a loan is provided as a house loan the credit union must hold the first legal charge secured on the property. However, where such a loan is provided as a personal loan there is not a requirement to hold the first legal charge secured on the property.
The Commission on Credit Unions recommended the restructuring of the sector and on foot of this recommendation the Credit Union Restructuring Board, ReBo, was established. Restructuring is currently being carried out on a voluntary, incentivised and time-bound basis in line with the Commission recommendation. While restructuring can be used by credit unions as a means of addressing current weaknesses or as a business strategy for credit unions that wish to achieve the scale necessary to develop a more sophisticated business model, it is recognised that restructuring will not apply to all credit unions and that some credit unions will continue to operate on a stand-alone basis.
While the Government recognises the important role of credit unions as a volunteer co-operative movement in this country, it is vital that measures implemented will ensure a viable credit union sector into the future.
[1] http://www.centralbank.ie/regulation/industry-sectors/credit-unions/Pages/Communications.aspx#Fit
