Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I am sure that will be made available in a moment. Credit unions in Ireland have a legislative framework designed specifically for credit unions in the Credit Union Act 1997, and the Credit Union and Co-operation with Overseas Regulators Act 2012 which updates the 1997 Act. The Credit Union and Co-operation with Overseas Regulators Act 2012 was signed into law by the President of Ireland on 19 December 2012. Following on from that there was an implementation plan put in place which was agreed by all stakeholders. It was agreed that such a plan was necessary for the coherent and timely commencement of all sections of the Act.

Credit unions are regulated and supervised by the Registrar of Credit Unions at the Central Bank, who is the independent regulator for credit unions. Within her independent regulatory discretion, the registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. The Minister for Finance's role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.

The outstanding sections of the 2012 Act relate to savings, borrowing, lending, investments, reserves and liquidity. The Minister has been informed by the Central Bank that the draft regulations set out in CP88, to which both Deputies referred, will be introduced on commencement of the remaining sections of the 2012 Act at end December 2015. The regulations will replace and, where appropriate, amend a number of requirements that currently exist in legislation and guidance. Additional requirements have also been included in the regulations, where necessary, to strengthen the regulatory framework.

The Minister and I are aware that a number of issues have been raised regarding the proposed regulations. The main issues are the introduction of a savings cap, the development of the credit union business model and the imposition of lending restrictions. Following consultation on the regulations, the Central Bank has introduced a number of changes.

The introduction of a maximum individual member's savings limit of €100,000 is to ensure the protection of members' savings and TO continue to ensure that credit unions' funding is sufficiently diversified and is not dependent on a small number of members. Following consultation with the credit union sector and representative bodies, the Central Bank amended the transitional arrangement for the savings regulations to provide for credit unions that have individual member savings in excess of €100,000 at the commencement of the regulations to apply to the Central Bank to retain these savings where they can demonstrate that it is appropriate and prudent for them to do so. That is quite a significant change. Credit unions can now apply to retain those savings. The Minister has been informed by the Registrar of Credit Unions that information regarding this matter and details of the application process will be available to credit unions before commencement of the regulations at the end of 2015. The Central Bank is currently refining its application criteria for retention of savings in excess of €100,000, to include a minimum asset size of €10 million; a minimum liquidity ratio of 25%; and the level of additional reserves in excess of the minimum 10% level, taking account of the scale, complexity and risk of the credit union. Consideration will also be given to other supervisory information, including whether a credit union has a regulatory direction or business restriction.

The Registry of Credit Unions intends to engage with the representative bodies - it is very important that they do engage - and to invite comments from them prior to finalisation of this application process. When the application process is finalised, the registry will provide an application form and explanatory notes in order to assist credit unions in making such an application. It is anticipated that application forms will be available during December 2015. The Central Bank envisages that applications will be accepted in the first quarter of 2016 and that applicant credit unions will be informed by the end of the second quarter of 2016 on the outcome of the process, which is well within the 12 month transitional period. Where a credit union has demonstrated that it meets the criteria, it will be in a position to retain members' savings in excess of €100,000 held at the commencement of the regulations.

The Central Bank has also informed the Minister that it is committed to undertaking a review of the continued appropriateness of the savings limit, once the impact of the restructuring process can be assessed.

It is expected that this review will commence within three years of the introduction of the regulations. The Central Bank has agreed to provide regular updates to the Department of Finance on developments in this matter.

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