Mr. Sean Hosford:

My name is Sean Hosford. I am the chair of the Credit Union Managers Association, CUMA, and I am joined today by my colleague Ms Lisa Stapleton. I thank the Chairman and members of the committee for invitation to come here to discuss recent regulatory matters and their impact on the credit union sector.

CUMA is the professional representative association for managers of credit unions in Ireland. CUMA provides professional development training and assistance to its members and engages with a wide range of stakeholders and industry bodies in our pursuit of excellence in professional standards in credit union management. Our main priority is to ensure that members’ savings are protected through prudent, transparent and effective professional management.

CUMA fully supports the introduction of a strong regulatory framework for credit unions as recommended by the Commission on Credit Unions. Credit union boards and management teams have successfully introduced major regulatory changes over the past three years. The introduction of these new requirements in the areas of risk, compliance, internal audit, fitness and probity and minimum competencies, policies and procedures were, we understood, designed to prepare credit unions for the future growth and development of our sector. This we believe would enable credit unions to further provide excellent high-quality services on a local basis to local communities.

Despite the prophecies of many, we have come through the financial crisis relatively unscathed and are well placed and prepared collectively and locally in the interests of our members to move to the next exciting stage of our development. However, CUMA is extremely disappointed at the outcome of the consultation process with regard to CP88. Following consultation with the movement, the Central Bank received 117 submissions all of which rejected the proposed regulations for sound business reasons. Having reviewed and then ignored these submissions, the Central Bank is proposing further restrictions on our business, the most controversial and ultimately damaging to credit unions being a cap on shares, a new short-term liquidity requirement, a cap on lending terms and, most controversially, the intention of the bank to regulate credit unions on an undifferentiated one-size-fits-all basis. CUMA believes that some of these proposals run contrary to the objects of credit unions, as enshrined in credit union legislation, and are disproportionate, unnecessary and potentially damaging to our future growth.

CUMA has contended in the context of previous consultation papers that the sector should not be regulated on a one-size-fits-all basis. Rather, we contend that a tiered regulatory approach which supports growth and development and which can be adapted to reflect proportionality and complexity, as recommended by the Commission on Credit Unions, would be more appropriate. This type of model is recognised as a strategy requirement in the Central Bank's strategic plan for the period 2013 to 2015. All stakeholders, including Government and the Central Bank, signed up to the recommendations of the Commission on Credit Unions. Credit unions have complied with the new extensive governance requirements as outlined earlier. We have participated in restructuring and have awaited the tiered framework to allow us to evolve under regulations based on the nature, scale and complexity of our chosen business model. The Central Bank, however, has diverged significantly and on a selective basis from the agreed set of recommendations by omission and by planning the introduction of this most recent manifestation of the one-size-fits-all regulations that will undermine the sustainability of credit unions, both small and large.

CUMA is concerned that the planned commencement at the end of December, without amendment, of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 and the regulations set out in the Central Bank's CP88 pose a significant threat to the competitive viability of the credit union sector. We believe CP88 regulations are an unnecessary involvement by our regulator in the day-to-day operations of credit unions. CUMA, therefore, calls on the Minister for Finance not to commence the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 pending a focused review of the proposed regulations in line with the recommendations of the Commission on Credit Unions.