Dáil Éireann Debate, Tuesday - 26 May 2015
275. Deputy Michael McGrath asked the Minister for Finance in view of the Registrar of Credit Unions remit to maintain the financial stability and well-being of credit unions, if he will provide details of the initiatives that have been undertaken by the Central Bank of Ireland to ensure development and growth of the credit union sector in recent times; and if he will make a statement on the matter. [20150/15]
Amharc ar fhreagraMy role as Minister for Finance is to ensure the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions .
The Central Bank, under the Credit Union Act, 1997 is responsible for administering the system of regulation and supervision of credit unions with a view to:
(a) the protection by each credit union of the funds of its members, and
(b) the maintenance of the financial stability and well-being of credit unions generally.
The three key strategic objectives that underpin the Central Bank's work in delivering this mandate are to:
- resolve weak and non-viable credit unions to protect members savings and maintain financial stability within the credit union sector;
- develop an appropriate legislative and regulatory framework to protect the stability of individual credit unions and to allow the sector to develop; and
- bring about longer term restructuring of the sector to ensure its long-term sustainability.
In line with recommendations of the Commission on Credit Unions Report a consultation protocol has been put in place between the Central Bank and credit unions. This provides that prior to the introduction of new regulations the Central Bank will engage with credit unions. The Central Bank has recently consulted on draft Regulations for Credit Unions on commencement of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 - Consultation Paper 88, that are proposed to apply to credit unions. The Central Bank has sought views from credit unions on the proposed regulations. This includes regulations on lending, savings, investments and additional services.
Specifically in relation to additional services CP88 indicated that the Central Bank is open to proposals from credit unions on new additional services they wish to provide to members where:
- the proposed additional service is supported by a robust business case;
- the proposed additional service is not contrary to financial services legislation;
- the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and
- systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.
Following the introduction of the regulations, the Central Bank also indicated in CP88 that where credit unions set out a clear path on how they wish to develop, the Central Bank will consider any amendments to the regulations that may be appropriate.
The consultation closed on 27 February 2015 and a feedback statement and final regulations are planned to be published by end June 2015, following consideration of the submissions received.
The credit union sector is currently being restructured on a voluntary, incentivised and time-bound basis. The Central Bank is taking a proactive approach to facilitating restructuring and works closely with the Credit Union Restructuring Board (ReBo) and individual credit unions on restructuring proposals. The Central Bank supports restructuring proposals that are financially sound, supported by proper risk and control frameworks and have clear leadership and vision for the future direction of the merged credit union. The important objective is to ensure that restructuring achieves better outcomes for current and prospective members, enhances the financial soundness of credit unions and acts as an enabler for future growth and development, setting the sector up for a viable and successful future.
The Registrar of Credit Unions has indicated that as part of the Central Bank's role to support the sustainable and prudent development of the credit union sector, the Central Bank intends to invite interested parties to discuss areas of credit union business model development and anticipates that these dialogues will provide credit union stakeholders with a well grounded basis to develop sound risk-based developments to their business models.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country and while my role and the Central Bank's role in relation to the credit union sector are distinct, we are both working to protect members' savings and maintain the financial stability and well-being of credit unions generally.
