Dáil debates
Wednesday, 12 October 2011
Central Bank and Credit Institutions (Resolution) (No. 2) Bill 2011: Report and Final Stages
12:00 pm
Michael Noonan (Limerick City, Fine Gael)
I move amendment No. 6:
In page 80, to delete lines 5 to 32 and substitute the following:
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| 1 | Section 87(3) | After paragraph (d), insert:"(e) require the credit union to raise within such period as may be specified and maintain such reserves or other financial resources or to maintain such non-financial resources, as may be specified;(f) require the credit union to take such steps as may be specified to strengthen its systems or controls;(g) require the credit union to apply a specified policy for making provision for such debts or treatment of assets, as may be specified, for the purposes of capital and reserve requirements;(h) require the credit union to restrict or limit its business, operations or activities, as the Bank considers necessary, to reduce risks inherent in its activities, products and systems;(i) require the credit union to provide a statement in writing to the Bank of the steps it will take to comply with any regulatory direction imposed under this section or with any other requirement imposed on a credit union under this Act;(j) impose limitations on the acceptance of members' savings or the employment of assets;". |
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Section 87 of the Credit Union Act 1997 was amended on Committee Stage to enhance the existing powers of the Central Bank to issue regulatory direction to credit unions. A number of concerns were raised by Deputies and credit union representatives that the powers concerned were too broad and open to interpretation. In response to those concerns I asked my Department to brief and consult with the Commission on Credit Unions, the Credit Unions Advisory Committee, the Irish League of Credit Unions and the Credit Union Development Association.
The text of the amendment was revisited on foot of those consultations to address the genuine concerns raised. I believe the text of the amendment proposed meets the financial stability needs of the Central Bank while providing for a balanced and proportionate approach from a credit union point of view. Feedback from the credit union representatives on this text has been very positive.
The Credit Union Act 1997 does not currently provide an appeal mechanism for the credit union regulatory directions. I intend to ask the Commission on Credit Unions to examine this issue and make appropriate recommendations for consideration in the Credit Union Bill to be published later this year.
This was a matter of lengthy debate on Committee Stage. An amendment was moved by me in effect to give the same powers of resolution in respect of credit unions as the bank would get under the Act in terms of other financial institutions. It was somewhat of a blunt instrument and after the debate, on consideration, we decided to refine it further in consultation with the stakeholders. We have agreement now from the credit union movement that what is now being put in on Report Stage is appropriate and acceptable to it.
There were also suggestions from various Deputies that we will put an appeal mechanism in place but it was not possible for me to get an appeal mechanism drafted, even if it was appropriate to do so, in time for Report Stage. The Commission on Credit Unions continues to sit and will present its final report in April. We are referring the issue of an appeal to the commission.
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