Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

The industry funding levy is not solely applied to credit unions. There is no requirement under regulations for the Minister to consult the CUAC. The Government recognises the important role credit unions play in Irish society as volunteer co-operative financial institutions.

Credit unions help to sustain the economy, with more than €2 billion of new lending every year. That is why the Minister for Finance requested the Central Bank refrain from increasing the cost of the industry funding levy on credit unions beyond 50% until the levy trajectory has reached the planned 50% rate by 2022, at which time the impact on the viability of the sector will be better understood; and a public consultation regarding increasing the levy rate for credit unions beyond 50% is undertaken, which would include a regulatory impact assessment on such a change to the sector.

It is worth repeating that the credit union sector is the only financial services sector currently exempt from the Central Bank's 100% target for funding the cost of regulation. This Government is determined to help support the strengthening growth in the credit union movement. This is evidenced by the recent introduction of the credit unions (interest on loans) Bill 2019. This Bill will permit credit unions to charge an interest rate on loans greater than the current ceiling of 1% per month. It will amend the interest ceiling to 2% per month. This amendment would provide credit unions with greater flexibility to risk price loan products and, in so doing, may create an opportunity for credit unions to provide new product offerings. The Bill followed the recommendation of the Credit Union Advisory Committee, CUAC, made to the Minister on the basis of a CUAC survey conducted in the credit union sector.

Another change introduced to help grow the sector was the revised investment regulations allowing credit unions to invest in tier 3 approved housing bodies, AHBs. The regulation came into effect in March 2018. At a sectoral level, the concentration on this can now facilitate a sector-wide investment of more than €700 million in tier 3 AHBs.

In addition, the Central Bank is currently reviewing the credit union lending framework, CP125, and it is expected to be concluded by the end of this year.

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