The Credit Union Act, 1997 (1997 Act) sets out the services that a credit union may provide to its members. In addition, the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) provides for services exempt from additional services requirements. Where a credit union wishes to provide services to its members, other than those services that are provided for under the 1997 Act or the list of services exempt from the additional services requirements set out in the 2016 Regulations, an application may be made to the Central Bank for approval to provide such additional services, in accordance with the provisions in sections 48-52 of the 1997 Act.
Debit card provision is subject to formal application and approval by the Central Bank, whether it be direct provision or distribution of third party debit cards under sections 48 and 49 of the Credit Union Act. There is no requirement for additional legislation.
There is currently a fully defined current account service including debit cards, called Members Personal Current Account Services (MPCAS), which is available to eligible credit unions as an additional service. The current eligibility criteria include a suggested minimum asset size of €75 million, reflecting the need for significant initial investment in start up initiatives of this nature. This also recognises the importance of transaction volume necessary for scale discounts which requires the participation of larger credit unions.
The business of providing payment service instruments such as debit cards on current accounts is a complex, sophisticated and regulated business activity requiring a distinct business model and associated risk management capabilities and capacities. Furthermore, the provision of such services requires on-going investment, volume pricing and access to technical expertise which given typical credit union size is likely to require a shared service model.
The suggested limit of €75 million may be re-examined once the framework is established and operational, at which stage, smaller credit unions will have greater clarity regarding cost, experience and operational considerations necessary for informed decision making on participation.
Details and applications forms are available on the Central Bank website. www.centralbank.ie/docs/default-source/Regulation/industry-market-sectors/credit-unions/applying-for-approvals/mpcas-application-form.pdf. The Central Bank has also indicated it is open to applications for alternative debit card proposals and recommends the MPCAS framework as a scalar template for such alternative proposals.
The Central Bank has approved 47 credit unions for MPCAS and have another 5 in progress. Combined these 52 credit unions have c€7.6 billion in assets.
The Government wants not only strong, vibrant credit unions offering a safe and secure place for members' savings but also credit unions being appropriately positioned to offer their members a wide range of services including loans, debit card facilities and new products and services based on the needs of their membership.