Brian Cowen (Laois-Offaly, Fianna Fail)

I agree there is always a need to strike an appropriate balance between allowing the credit unions to expand the range of services as they would wish while at the same time ensuring members' savings are not put at undue risk — that is the balance we are attempting to strike. As progress was not being made on long-running issues, since I became Minister for Finance I have instigated a process of discussion and engagement. This has brought us a long way down the road by building a consensus and building confidence in the system between credit unions, which vary in scale and size, the Irish League of Credit Unions and the Registrar of Credit Unions, and by understanding how the registrar, as an authorised officer, interfaces within the Financial Regulator's office. We need to avoid misunderstandings and get on with the agenda, which is a manifestation of the success we are having in this respect.

While respecting the ethos of credit unions, they have been given the funds that are under their care and management and it is necessary for them to be part of the regulatory regime in the interests of all, including the credit unions themselves. At the same time, we will improve the range of services, the type of loans and the number of loans over a certain period that credit unions can provide, as I outlined in my previous contribution.

On the investment side, the Registrar of Credit Unions took steps to limit the exposure of credit unions and the investment market by issuing a guidance note on investments in October 2006. This guidance note sets out the framework within which credit unions should maintain their investments and it is subject to regular review by the registrar in consultation with the sector.

The board of directors of each individual credit union is responsible for managing the funds and setting the investment policy of that credit union — this is the individual autonomy they exercise. However, the registrar expects credit unions to comply with this guidance in order to avoid undue risk to members' savings and will monitor credit unions' investments against this guidance.

The guidance note sets out a list of authorised investments for credit unions and within this list there are limits for each class of investment instrument in which credit unions can invest. While they are not precluded from investing in non-capital guaranteed products under current legislation or guidance, and they can invest in equities, under the terms of the investment framework investment in equities, for example, is not to exceed 5% of the total of the credit union's investment portfolio. My point is that guidance is available and action and monitoring is taking place with a view to providing the appropriate balance to which I referred.

With regard to the savings protection scheme, ongoing discussions are making progress subject to the various legal advices. While some of the issues are long-running and little progress was made in the past, I am confident we are set fair to address them in a way that meets the requirements of all involved, despite a background of past suspicion and lack of trust.

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