Pearse Doherty (Donegal, Sinn Fein)
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6. To ask the Minister for Finance if he supports the proposal that credit union movement should be empowered to offer debit card facilities to its members if it so chooses; and if he will make a statement on the matter. [34029/16]

Pearse Doherty (Donegal, Sinn Fein)
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We are well aware of the standard reply that credit unions are allowed to seek permission to offer debit card services but they need to jump through many hoops to get that permission. Having engaged with the credit union movement I have come to the conclusion that the bar is very purposely set at a height to prevent credit unions from being able to deliver debit card services. I ask the Minister to make a statement on that matter.

Michael Noonan (Limerick City, Fine Gael)
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My role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. The Registrar of Credit Unions at the Central Bank of Ireland 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  Credit Union Act 1997 Act and related statutory instruments set out the services that a credit union may provide to its members. Where a credit union wishes to provide services to its members in addition to the services that are provided for under the 1997 Act, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48 to 52 of the 1997 Act.

I have been informed by the Central Bank that it is supportive of credit unions developing additional services and it has indicated to credit unions that where they are considering offering debit card services to their members, they should, in the first instance, contact the Registry of Credit Unions to inform it of any such proposals.Furthermore, in respect of debit cards, the Central Bank states that it has been clear in its engagement with credit unions and other stakeholders who are seeking to offer this service that it must be supported by the appropriate payment account service. Consequently, using the additional services framework in sections 48 to 52 of the 1997 Act, the Central Bank has defined and described a Member Personal Current Account Service, MPCAS. This service, which was recently approved for six applicant credit unions, provides for credit unions to offer debit cards, overdrafts and a full range of payment services within an appropriate risk framework.

The Central Bank will publish details of MPCAS and the approval process, along with details of the application requirements and related guidance, over the coming weeks.

Additional information not given on the floor of the House.

The Central Bank expects to hear from eligible credit unions wishing to apply for this additional service over the coming months.Initially, credit unions that have close to or in excess of €75 million in total assets are eligible to apply.There are about 65 credit unions in this cohort which collectively have €8 billion in assets. Depending on their success in collaborating to implement a viable business, it is possible to envisage smaller credit unions being able to offer the service in time. This approval provides for debit card provision amongst other key features.

MPCAS provides for shared service facilities, which approved credit unions will use to develop and implement services in a standardised way from both a technological and operational perspective. This represents a significant and positive development for many credit unions who wish to provide current account services and payment instruments such as debit cards to their members.The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. However, the Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and we are determined to support a strengthened and growing credit union movement.

Pearse Doherty (Donegal, Sinn Fein)
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I am a firm believer in the regulation of financial services in an appropriate manner but there is a balance to be struck between our role as legislators, setting the laws and the boundaries for the regulator and as representatives of the industry and consumers. I believe, from the representations I have received from credit unions, that they are capable and ready, with some preparation, to move to a position where they can offer their members debit card services and that we, as Deputies, should support that.

The programme for Government specifically commits to credit unions moving towards electronic and online services, including the roll out of debit cards and enhanced online banking services. We know that 170 credit unions are already processing Single Euro Payments Area, SEPA, payments on behalf of their members. There is now a demand from members for debit card services. Credit unions need to continue to move with the times.

The crux of the issue is that the Central Bank has taken a negative view and despite two years of engagement with the credit unions, is blocking them from providing this service. What can we do, collectively, to bring this about and to fulfil the commitments in the programme for Government?

Michael Noonan (Limerick City, Fine Gael)
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I do not agree that the Central Bank is blocking the credit unions or preventing them from providing additional services. There is a procedure laid down in law for the credit unions to apply to offer such services. Already, the Central Bank has given approval to six applicant credit unions for the provision of debit cards, overdrafts and a full range of payment services.

The Central Bank will publish details of the approval process, along with details of the application requirements and related guidance, over the coming weeks. The Bank expects to hear from eligible credit unions wishing to apply for this additional service over the coming months.  Initially, credit unions that have close to or in excess of €75 million in total assets are eligible to apply.  There are about 65 credit unions in this cohort which collectively have €8 billion in assets. Depending on their success in collaborating to implement a viable business, it is possible to envisage smaller credit unions being able to offer the service in time. This approval provides for debit card provision among other key features. 

Six credit unions have been approved already and a further 65 credit unions have an asset base which the Central Bank believes would make them eligible. Those credit unions will be encouraged to apply in the next few months. The smaller credit unions will be considered on their merits.

Pearse Doherty (Donegal, Sinn Fein)
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The industry has a different view of the position of the Central Bank and the Regulator on this issue. Credit unions have been frustrated over the last number of years. Indeed, the Central Bank stepped in and stopped a particular credit union from providing debit card services to its members.

We can move forward in a number of different ways. First, we can continue with the back and forth between the credit unions and the Regulator on the issue of debit cards but to date, that has not delivered the type of result that was expected. Second, we can look for a political understanding that all sides wish to prioritise this issue, get down to brass tacks and put in place a forum at which both sides could put their case - accepting that the Regulator has a duty to safeguard the sector - and reach an agreement. Third, we can revisit the legislation. There is scope to revisit the legislation to determine whether the right of credit unions to service their members with debit cards should be an exempted provision, as other services are.

Michael Noonan (Limerick City, Fine Gael)
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There is no problem with the legislation or with the regulatory authorities in the Central Bank. The Regulator of Credit Unions has provided information to the effect that six credit unions have already been approved for debit cards. Furthermore, 65 others are deemed by the Central Bank, on an overview, to have a sufficient asset base to apply in the next few months to provide debit card facilities. Provision will be made for the smaller credit unions in time.

The Regulator has to be prudent at the end of the day. The primary concern must be to protect the deposits of credit union members. There have been a number of unfortunate events, most recently in north Dublin, relating to credit unions over the years with which Deputy Doherty will be very familiar.