Joe McHugh (Donegal North East, Fine Gael) | Oireachtas source

I want to acknowledge all of the contributions on both sides of the House, which were constructive. Deputy Connaughton pointed out that we have to keep the conversation going and if ideas can be fed through it is important that happens. The Government has shown its commitment to the credit union movement in Ireland by establishing the commission on credit unions in May 2011 to make recommendations on the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, volunteer ethos and community focus, while paying due regard to the need to protect fully members’ savings and financial stability.

The Commission report was co-authored and agreed by key stakeholders, including credit union representatives. The process was a participative one, with wide representation from the credit union movement. The agreed commission report sets out the blueprint for the viability of credit unions into the future. Its constituent elements are interrelated and mutually reinforcing. The Government fully accepted all recommendations in the commission’s report which was presented to it in March 2012. Over 60 of these recommendations are contained in the Credit Union and Co-operation with Overseas Regulators Act 2012, which is the first new legislation for credit unions in 15 years.

The 2012 Act was signed into law by the President in December 2012. It was agreed at that time that it would be neither practical nor feasible to commence the 2012 Act in its entirety in one fell swoop. This has provided credit unions with the necessary time to ensure that the required processes and procedures are in place prior to the implementation of each tranche. The report of the commission on credit unions made a number of recommendations regarding the strengthening of the regulatory framework for credit unions. It also recommended that regulation making powers be delegated to the Central Bank. Therefore, it is a matter for the registrar of credit unions to make regulations and set limits for credit unions, including savings limits.

In keeping with this, the registrar of credit unions is introducing new regulations for credit unions. Regarding these regulations, it must be clear that the registrar of credit unions at the Central Bank 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. In line with the recommendations of the commission on credit unions, and having regard to international best practice, the Central Bank conducted a consultation process in December 2013 on a proposed two-tier regulatory approach as set out in consultation paper 76, CP76.

The Central Bank stated that feedback received on CP76 indicated that the majority of respondents were of the view that a tiered regulatory approach should not be introduced at this time given the amount of change that the credit union sector is currently undergoing. Following on from this, in November 2014 the Central Bank conducted a second full consultation process in the form of consultation paper 88, CP88. A regulatory impact analysis was also conducted on the new regulations. While the proposed regulations are not of a specific tiered nature, the registrar will be provided with powers to make appropriate and timely changes to regulations where it is considered necessary.

At the current time, it is the Minister’s intention to commence the remaining sections of the 2012 Act on 31 December 2015, in line with the introduction of the regulations by the registrar of credit unions. These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the 1997 Act. The Government has no role in setting regulations for a strengthened regulatory framework for credit unions.

The Minister for Finance and the Government are aware of and recognise the concerns of the credit union movement regarding the savings limit of €100,000. However, it must be reiterated that the setting of the savings limit of €100,000 is a matter for the registrar, who has stated that this measure is being introduced to ensure the protection of members’ savings and that credit union funding is sufficiently diversified and not dependent on a small number of members.

The Minister for Finance has emphasised that his officials have been in constant contact with representative bodies. He met credit union representative bodies on 12 November 2015, when the perceived impact of the new regulations was discussed. At that meeting the Minister asked credit union representatives to revert with their specific concerns and he has committed to communicate these concerns to the registrar. Further follow-up meetings between the Department of Finance and the representative bodies will take place tomorrow.

It is recognised that for a business to grow it needs to develop its business model and credit unions, while not-for-profit entities, need to grow income to ensure sector viability. When the Minister met representative bodies the week before last, they were invited to share any business model development ideas they may have to introduce new income opportunities to the sector to ensure future growth and sector viability. The Minister looks forward to receiving proposals that will support and grow income and maintain viability while protecting members’ savings.

It was mentioned by a number of Deputies yesterday that the sector has €8 billion available for investment in social housing. While my colleague, the Minister for the Environment, Community and Local Government, is primarily responsible for the formulation and implementation of policy and the preparation of legislation on housing, Department of Finance officials are scheduled to meet Department of the Environment, Community and Local Government officials later this week to discuss the proposals.

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