Tuesday, 27 July 2021

Ceisteanna (382, 383, 384)

Holly Cairns

Ceist:

382. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to fulfil the Programme for Government commitment to review the policy framework within which credit unions operate. [40181/21]

Amharc ar fhreagra

Holly Cairns

Ceist:

383. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to fulfil the Programme for Government commitment to enable the credit union movement to grow as a key provider of community banking in the country. [40182/21]

Amharc ar fhreagra

Holly Cairns

Ceist:

384. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to fulfil the Programme for Government commitment to support credit unions in the expansion of services to encourage community development. [40183/21]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 382 to 384, inclusive, together.

There are a number of commitments set out in the Programme for Government in relation to the credit union sector that the Government is progressing.

The Review of the Policy Framework is now at an advanced stage. Since September 2020, the Department has held extensive engagement with credit union representative bodies to seek their feedback. During June and July Minister Fleming, who has responsibility for credit unions, has met with ten credit union stakeholders including representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee and the regulator to gather further information to help inform the next steps of the review.

In terms of supporting and enabling the sector to grow and expand, the following are some recent developments in relation to lending and investment regulations, SME lending, access to finance for retrofit, additional services and investment in Approved Housing Bodies (AHBs).

Review of Lending and Investment Regulations

The Central Bank has in recent years completed reviews of both the lending and investment frameworks to ensure that credit unions operate under a framework that is both tailored and proportionate, to reflect the unique nature of the sector, and to provide flexibility for credit unions who have ambitions to grow.

Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in additional SME and mortgage loans, with further lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As at March 2021, credit unions had a combined mortgage and SME loan book of circa €355 million, an increase of 15% year-on-year.

The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including accounts in authorised credit institutions, certain bank and corporate bonds, sovereign bonds and investments in Tier 3 Approved Housing Bodies (AHBs) to provide social housing.

SME Lending

Nineteen credit unions, supported by ILCU, CUDA and Metamo, were approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. With their local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book. SME lending has grown 3.9% year on year to end March 2021.

Access to Finance for Retrofit

As you will be aware, the Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.

Other Services

The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 60 credit unions have been approved to provide Member Personal Current Account Service (MPCAS).

A further group of credit unions have recently begun distributing insurance products to their members.

Investment in Approved Housing Bodies

Since 1 May 2018 it has been possible for credit unions to invest in Approved Housing Bodies through a regulated vehicle. I understand that a number projects are being progressed by the sector at present, which may lead to investment in AHBs.

Question No. 383 answered with Question No. 382.
Question No. 384 answered with Question No. 382.