Dáil Éireann Debate, Tuesday - 3 November 2015
293. Deputy Tom Fleming asked the Minister for Finance if he will refrain from commencing the recommendcations in Consultation Paper 88 while considering the recommendation of the International Credit Union Regulators' Network report for the review it says is necessary; if he will examine correspondence (details supplied) regarding same; and if he will make a statement on the matter. [37523/15]
Amharc ar fhreagra311. Deputy Brendan Griffin asked the Minister for Finance his views on a matter regarding a credit union (details supplied); and if he will make a statement on the matter. [37852/15]
Amharc ar fhreagra327. Deputy Thomas Pringle asked the Minister for Finance for an update on his intentions to commence certain provisions of the Credit Union and Co-operation with Overseas Regulators Act 2012, as part of the Consultation Paper 88 issued by the Central Bank which is to be enacted by 1 January 2016; if he is aware of the concerns raised by members of credit unions, such as the imposition of a €100,000 cap and lending restrictions, and the regulatory reserve ratio, which ultimately restrict credit unions' involvement in important social issues, such as funding social housing; and if he will make a statement on the matter. [38114/15]
Amharc ar fhreagra333. Deputy Michael McCarthy asked the Minister for Finance his views on the Consultation Paper 88 issued by the Central Bank of Ireland; if he will refrain from commencing its recommendations while considering the recommendation of the report of the International Credit Union Regulators' Network peer review; and if he will make a statement on the matter. [38290/15]
Amharc ar fhreagraI propose to take Questions Nos. 293, 311, 327 and 333 together.
The Government recognises the distinct and important role that credit unions play in Irish society and the financial sector and is committed, with the Central Bank, to achieving our vision of financially strong, well governed credit unions providing services to current and future members.
I have been informed by the Central Bank that the draft regulations set out in Consultation Paper 88 (CP88), will be introduced at end December 2015. I will ask the Registrar of Credit Unions to consider the views of the credit union movement as regards the draft regulations and their implementation and report back to me before I commence the remaining sections of the 2012 Act on 31 December 2015 in line with the introduction of the regulations. These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the Credit Union Act 1997.
The need for credit unions to grow income has been recognised as a requirement for sector viability. While developing new products and services is a necessary element of this, the Central Bank has highlighted the importance of credit unions ensuring that they are in a position to grow their income from their traditional lending business. It is also recognised that there is a level of change in the sector arising from the voluntary restructuring programme.
I am aware of the concerns highlighted by the credit union sector and am satisfied in relation to the cap on members' savings that the Central Bank is developing an application process for credit unions to apply to continue to hold member accounts with savings in excess of the €100,000 cap. Credit unions will be provided with the relevant information before end 2015.
Regarding lending restrictions placed on certain credit unions by the Central Bank, the Registrar of Credit Unions announced a review of lending restrictions in February 2015 with a closing date for applications of 30 September 2015. The Central Bank has informed me that 59% of applications received have been reviewed. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board s stated credit risk appetite. As of this week c. 40% of credit unions are now subject to a lending restriction.
The Central Bank has informed me that since 2010 it has received less than 10 applications for approval of additional services under sections 48 to 52 of the Credit Union Act 1997. These applications have all been received in recent months and are currently at a various stages of the approval process. The Central Bank further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In supporting the sustainable and prudent development of the sector, the Central Bank is working to ensure that proposed changes to the business model are prudently structured and implemented. To that effect the Central Bank has invited a number of interested parties in the credit union sector to participate in focused dialogue in November 2015 with a view to gaining a better understanding of how credit unions want to develop their business model and to identify changes that may be required to the regulatory framework to facilitate prudent development.
Commencement of all sections of the 2012 Act has been aligned with the credit union financial year and the introduction of the underpinning Central Bank regulations, with a view to implementation of the 2012 Act in a coherent and cohesive manner. The publication of the regulations marks another important step in the development of a strengthened regulatory framework for credit unions. It is considered that these regulations, combined with the commencement of the remaining sections of the 2012 Act and the prudential and governance requirements already in place, provide an appropriate regulatory framework for the credit union sector at this time.
The provision of regulation making powers to the Central Bank on commencement of the remaining sections of the 2012 Act provides flexibility so that the Central Bank can, in the future, review and update the regulations as appropriate on a timely basis following consultation. The Central Bank is keen to ensure that the regulations remain appropriate for the credit union sector and in the future, 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 purpose of the International Credit Union Regulators' Network (ICURN) review was to assess the performance of the Central Bank's performance of its regulatory functions in relation to credit unions. The review assessed the legal, regulatory and prudential supervisory framework in place to fulfil the Central Bank's mandate under section 84 of the Credit Union Act, 1997 and accordingly focused on the legal and regulatory framework for the regulation of credit unions in effect at the time of the review. Overall the review found that the Central Bank effectively performs its functions in the regulation and supervision of the credit union sector.
ICURN made a number of recommendations for refinements. Under the heading Communications and Guidance, ICURN also suggested that consideration be given by the relevant authority to directing a review to evaluate the implementation of the recommendations of the Commission on Credit Unions. ICURN further stated that this is not a matter for the Central Bank.
I am aware of the suggestion made in the ICURN report that a review to evaluate the implementation of the original recommendations of the Commission on Credit Unions could be carried out by the Credit Union Advisory Committee.
The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to continue to support a strengthened and growing credit union movement.
