Dáil Éireann Debate, Tuesday - 27 March 2018
86. Deputy Willie Penrose asked the Minister for Finance the work being undertaken by his Department to implement the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach's recommendation that credit unions be able to lend to affordable housing bodies and local authorities; and if he will make a statement on the matter. [13624/18]
Amharc ar fhreagra97. Deputy Alan Kelly asked the Minister for Finance if his Department is examining an amendment to the Credit Union and Co-operation with Overseas Regulators Act 2012 to allow credit unions lend to affordable housing bodies and local authorities as recommended by the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach; and if he will make a statement on the matter. [13619/18]
Amharc ar fhreagraI propose to take Questions Nos. 86 and 97 together.
The common bond restrictions limit the potential for credit unions to lend to housing bodies and local authorities, either directly or on a syndicated basis.
As previously set out in my reply to parliamentary question No. 55 for written answer on 22nd February 2018, the Credit Union and Co-Operation with Overseas Regulators Act 2012 introduced changes to the Credit Union Act, 1997 (the 1997 Act). Since 1 January 2016, section 43 of the 1997 Act provides that the Central Bank may prescribe investments in which a credit union may invest its funds.
The Central Bank undertook a review of the investment framework for credit unions in 2017. This review resulted in the publication of Consultation Paper 109 (CP109) which consulted on potential changes to the investment framework for credit unions. One of the proposals in CP109 was that credit unions be permitted to provide funding for the provision of social housing to Tier 3 Approved Housing Bodies (AHBs).
Submissions to CP109 were broadly supportive of credit unions providing funding to Tier 3 AHBs. Taking account of the feedback provided to CP109, amended regulations commenced on 1 March 2018 which permit credit unions to provide funding to Tier 3 AHBs for the provision of social housing. The maximum permitted investment amount per credit union is 50% of regulatory reserves where a credit union has total assets of at least €100 million and 25% of regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of close to €700 million.
The Central Bank is open to considering further investment proposals. Where the Central Bank receives detailed proposals which can demonstrate that an investment could fall within the appropriate risk profile for credit union investments, it will consider further amendments to the investment regulations to facilitate such investments in the future.
The Central Bank has committed to undertaking and publishing analysis of credit union sector investments, two years post commencement of the amending investment regulations for credit unions, to assess and analyse the actual impact which the changes to the investment regulations have had.
