Brian Lenihan Jnr (Dublin West, Fianna Fail)

As Deputies will recognise, the current serious difficulties in the financial sector and the accompanying economic downturn are affecting all financial institutions, including credit unions. On account of the reduced availability of credit in the banking system, credit unions are now experiencing an increase in demand from their members for loans. There has also been some increase in bad and doubtful debts and, as is the case across the whole of the financial sector, there have been losses on credit union investments. It is not surprising that this combination of trends has led to a situation where credit unions generally have reported a decline in profits for 2008.

However, it is important to note that the Registrar of Credit Unions has highlighted that of the 419 credit unions registered in the Republic, only a handful are experiencing significant difficulties at present. The registrar is continuing to work closely with the boards of these credit unions. Very close oversight, monitoring and controls over these credit unions by the registrar is intended to assist them in addressing current issues and to ensure their long-term stability and sustainability. The registrar reports regularly to the regulatory authority to ensure early identification and response to any significant issues relating to the credit union movement or any individual credit union. In addition, the registrar briefs my Department on these matters on an ongoing basis and my officials keep me fully informed of relevant developments in the credit union sector. I did not, therefore, need to request a specific report from the registrar on the issue raised in the Deputy's question.

The Registrar of Credit Unions is responsible for the regulation and supervision of credit unions using the powers available under the Credit Union Act 1997. This rules-based legislation provides extensive powers of direction to the registrar to ensure the financial soundness and safety of credit unions and to protect credit union savers. The registrar can also issue regulatory direction and prohibition orders to credit unions in regard to a broad range of issues, including investments, raising of funds, loans, assets and liabilities ratios and the composition of their assets and liabilities.

Additional information not provided on the floor of the House.

He has extensive powers of inspection and investigation of credit unions as well as broad supervisory powers, including to appoint, suspend or remove a person as a director of a credit union or to remove auditors. A number of offences are also provided for in the Act.

The extensive powers currently available to the registrar under the Act are important in ensuring that the regulatory system is robust and effective and in particular safeguards members' savings. The rules-based approach to regulation embodied in the Credit Union Act has clearly served the credit union movement well, as is demonstrated by the small minority of credit unions which the registrar is currently monitoring closely in the current environment.

See this speech in context