Ms Anne Marie McKiernan:

I thank Deputy Barry and I will try to address as many of his points as possible. I completely agree it is most important for credit unions to focus on getting the basics right. In my statement I referred to the four areas to focus on, one of which is to increasing core lending which is personal finance to small businesses and households. That is the area in which the credit union brand is best established and where it has expertise. While mistakes may have been made in the past, credit unions are generally now working to put in place the higher regulatory requirements and better practices. We are very happy to work closely with them to do that. It is a significant part of our supervisory on site engagement with the credit unions. However, where proposals for the sector are being developed - and we could mention social housing here - we do want to work with the sector bodies and the credit unions to see whether the proposals are proportionate, appropriate and viable for the sector. We have a two-pronged approach to ensure they can do their core business well and grow it in the current environment and that they are positioned to take on any new business model development where necessary or appropriate.

I will now turn to the issue of the significant fall in the core lending. Some of the drop in lending is to be seen in the context in which the credit unions were operating; an environment in which households and small businesses were cutting back significantly on borrowing. All financial institutions were affected. The Deputy asked if the lending restrictions which we put in place were a factor. Our view is that they were not. Our lending restrictions were calibrated to reduce excessive risk taking but to not impact on the core and small personal loans that could be undertaken. Some years after lending restrictions were introduced we conducted research to see if they were biting credit unions and forcing them to turn customers away and the answer was they were not. In general the restrictions applied to loans of between €10,000 and €30,000 but the average loan size in the sector is between €6,000 and €8,000, depending on the time of year. Lending restrictions were introduced because we saw instances of excessive risk taking out of line with the kind of model and practices for which we advocate. Restrictions were imposed to help reduce the vulnerability of the sector and with the intention to putting an impetus on credit unions to improve their basic practices. In our supervisory engagements it was subsequently found that some credit unions were not addressing those basic weaknesses, so short-term restrictions became longer term.

To bring focus back onto getting the basics right and on having the right credit control standards, we initiated a review earlier in 2015. This was to ensure that credit unions could act proactively on their credit risk management practices. It is a good news story that 55 credit unions were able to meet our requirements and better protect their members' funds by having the adequate risk management standards in place. It is unfortunate that there are still a number of credit unions that cannot meet those basic requirements. We have had to turn down 20 applications for lending restriction reviews. It says something about the sector that in many cases credit unions are happy to live under lending restrictions and that sets their appetite for how much lending they are wiling to do.

In the context of dialogue with the sector I accept the Deputy's point that some credit unions are unhappy with some of the measures we have introduced. However, our mandate is to protect credit unions' funds which, through their lending, is other people's money.

Our requirements are proportionate to the nature, scale and complexity of the Irish credit union sector and that has been reviewed externally. We would highlight that the peer review found evidence of poor quality underwriting still in place in many credit unions. One can expect that we will put standards and engagements in place to try to improve that. On the issue of dialogue, Ms Elaine Byrne is better placed to answer that question than we, we have a series of information seminars across the sector and across the country to ensure that credit unions are aware not only of what we are doing but why we are doing it and how it is all based on our mandate to protect their funds and the stability of their sector.