Brian Cowen (Laois-Offaly, Fianna Fail)

A number of general points need to be made in response to the Deputy's questions. Significant funds are held in the credit unions and we all agree that a regulatory framework is required to deal with them. When we consider the investment issues for credit unions and how we can proceed, in the light of the high proportion of credit union assets now invested, the registrar has highlighted that under the current investment rules credit unions are not precluded from taking on inappropriate levels of risk. The registrar made proposals in November 2005 for a new investment framework to protect and safeguard the risk profile for credit unions and ensure that members' savings continue to be safeguarded.

The registrar is consulting the representative bodies for credit unions with a view to securing an agreed approach to the measures and to the implementation of the proposed new investment framework. Notwithstanding the continuing discussions regarding certain details of the new rules, there is a broad consensus that a tightening up of investment rules is required, taking into account the need for credit unions to generate a reasonable return on their investments. My intention is, therefore, to submit both the registrar's proposals for the new investment framework and the league's proposals for regulatory and legal changes to the Credit Union Advisory Committee, which is the statutory advisory body for credit unions under the Credit Union Act, at an early date for its views in order to inform my decision on the next steps required.

In addressing these matters my priorities will remain the need to ensure the interests of members of credit unions are protected and that the regulatory system operates effectively. This will underpin the continued stability and financial sustainability of the credit union movement and provide a framework which supports the continued growth and development of the movement.

The legal framework for credit unions has worked well and has met the needs of the credit union movement to date. This is not to say that the Credit Union Act is perfect and is not in need of some amendment. However, the legislation has enabled the movement to respond to the changing environment and the changing financial needs of its members, by introducing a wider range of savings products, insurance products, foreign exchange etc. The ability of the movement to respond to SSIAs and to take on board a significant chunk of this market is also an indicator that the framework works and is adaptable and reasonably responsive to the movement's needs.

A discourse is ongoing and we will refer all those matters to the Credit Union Advisory Committee and take our next steps from there.

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