Dáil Éireann Debate, Tuesday - 7 February 2017
165. Deputy Pearse Doherty asked the Minister for Finance the legislative action he will take to allow credit unions to lend directly to housing bodies and local authorities for social and affordable housing; and if he will make a statement on the matter. [5383/17]
Amharc ar fhreagraOn 1 January 2016 I commenced the final sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) following discussions with credit union representative bodies. The 2012 Act was the first credit union specific legislation introduced in 15 years and was implemented in a coherent manner over three years to enable credit unions embed the changes into their day to day business. Following commencement of the legislation, the Central Bank introduced the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, regarding a number of areas including savings, borrowing, lending, investments and liquidity.
The investment regulations made specific reference to section 43 of the Act and to further classes of investments in which a credit union may invest its funds which may include investments in projects of a public nature. The regulations provide that investments in projects of a public nature include, but are not limited to, investments in social housing projects. The Central Bank will review the investment regulations for credit unions, including a public consultation, in 2017. Notwithstanding any potential changes that may be made to the regulations, the legislative requirement for credit unions to ensure investments do not involve undue risk to members' savings will remain the overriding factor which must inform all credit union investment decisions.
There are a number of areas which some credit unions consider restrict lending. Under section 35(2) of the Credit Union Act 1997 (1997 Act) a credit union can only lend to its members. Under section 17 of the 1997 Act all members must hold the common bond as set out in the rules of the credit union. Under section 6 of the 1997 Act one of the objects of a credit union is the creation of sources of credit for the mutual benefit of its members at a fair and reasonable rate of interest.
In its recent report the Credit Union Advisory Committee (CUAC) made recommendations under seven specific headings. One of those recommendations is to carry out a full review of lending limits and concentration limits under section 35, including the basis of the calculation of the limits together with the liquidity requirements attaching to same. In relation to the common bond, the Commission on Credit Unions in its 2012 Review surveyed credit unions - 54% of credit unions considered that the common bond should remain unchanged, 20% considered that it should be relaxed and 26% believed that membership of a credit union should be open to all. The Commission subsequently did not recommend any fundamental changes to the common bond. However, CUAC has recommended that three policy papers be developed by end September 2017, including a policy paper on the common bond.
CUAC has been working for a number of months devising an implementation plan in advance of the first meeting of the Implementation Group on 20 February 2017. My Department has been working closely with CUAC. The Implementation Group consists of a member from each credit union representative body, the Central Bank of Ireland. It will also have a CUAC member and will be chaired by a Department official. I look forward to regular updates on progress in implementing CUACs Report.
