Michael McGrath (Cork South Central, Fianna Fail)
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41. To ask the Minister for Finance the status of the work of the implementation group concerning the recommendations of the Credit Union Advisory Committee report; and if he will make a statement on the matter. [16414/17]

Michael Noonan (Limerick City, Fine Gael)
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The Credit Union Advisory Committee, CUAC, in its review of implementation of the recommendations in the commission on credit unions report, recommended that an implementation group be established for a specified period of time to oversee and monitor implementation of those recommendations in a methodical manner and to advise the Minister for Finance on progress. 

Publication of the report in July 2016 was just the beginning of the process. From September 2016 onwards CUAC continued working to enable a coherent implementation plan be devised and the Department worked closely with CUAC on this.

In line with CUAC's recommendations, the Department invited one nominee from each of the stakeholder groups. The implementation group consists of a representative from each of the following: the Irish League of Credit Unions, the Credit Union Development Association, the Credit Union Managers' Association, the National Supervisors Forum and the Central Bank. The implementation group also has a CUAC representative and is chaired by the Department. This broad membership will ensure participation and contribution from all credit union perspectives.

The implementation group held its inaugural meeting on Monday 20th February 2017, which was also attended by all CUAC members, and met again on the 22 March 2017.  It is intended that each CUAC recommendation will be addressed separately with a view to implementation at the appropriate time.  Meetings will continue on a monthly basis with the next meeting scheduled for late April 2017. The term of the implementation group is for one year, which may be extended at the discretion of the Minister. I look forward to receiving regular progress reports on the implementation of these very important recommendations.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. The Oireachtas Committee on Finance held some hearings recently into credit union issues and will be compiling a report. I hope that the report can be agreed by all members of the committee. It will make a series of recommendations to the Minister and to the House.

There is a high degree of frustration within the credit union sector. Some credit union managers and boards are quite demoralised at what they see as the lack of focus on the key issues that are holding them back. If one looks at the CUAC recommendations around tiered regulation, for example, which was not implemented following the commission on credit unions' recommendations, then there is serious concern. There is concern about the overall direction, a loan to asset ratio of just 26%, and the fact that longer loans have been replaced by shorter loans of smaller amounts. There are serious business model issues here which need to be addressed. Can the Minister tell us if he thinks that the CUAC implementation body is the appropriate body to deal with those business model issues?

Michael Noonan (Limerick City, Fine Gael)
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The role of the Minister for Finance in respect of the credit unions is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of the credit unions. The Government has a clear policy to support the strategic growth and development of credit unions in Ireland as set out in the commission on credit union's report and recommendations. The safety of member's savings and the security of the credit union sector as a whole are priorities for the Government, but of course the registrar of credit unions is a role for the Central Bank. They are regulated and supervised by the registrar of credit unions at the Central Bank. The current registrar, Ms Anne Marie McKiernan, under the Credit Union Act 1997 carries out the function of the registrar of the credit unions that are regulated. The primary aim of the regulator is to ensure that funds deposited are safe.

There has been a series of difficulties with credit unions across the country.

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However, there is a commitment to implement the recommendations of the commission and that work is under way now. Credit union representatives of all perspectives are included in the implementation group.

Michael McGrath (Cork South Central, Fianna Fail)
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The credit unions themselves are also committed to protecting members' savings and they do so. They take umbrage at continuous references to that priority by the registrar as though it was the sole preserve of the registrar. The key issue is business model development and the CUAC report recommended that credit unions prioritise business model development and consider investing significantly in the development of their business models, either individually or collectively. They say they are doing that but are being frustrated by the Central Bank. They say that when they make proposals for new services it takes forever to get a decision or they are rejected. In the confidence and supply agreement which my party entered into with Fine Gael there is a commitment to develop a strategy for the growth and development of the credit union sector. I do not see anything yet that complies with that and I do not believe the implementation of the CUAC report meets that objective. The Minister should at least request the implementation group to focus specifically on business model development for the credit union sector. The overall trends are not positive and I am sure the Minister does not want to be the Minister who presided over the decline of a great national movement.

Michael Noonan (Limerick City, Fine Gael)
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I share the Deputy's admiration for the credit union movement and for the excellent people, both at professional and volunteer level, who manage credit unions so effectively all over the country. The Central Bank is committed to assisting the credit unions in developing their business model. It has informed me, as Minister for Finance, that it is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In its role in supporting the sector the Central Bank wants to ensure that any proposed changes in the business model are appropriately structured and implemented. The Registrar of Credit Unions in the Central Bank recognises the strategic challenges facing the sector, including the need to revitalise the business model and to find ways of doing business that better serve members and deliver on their expectations. The registrar is committed to engaging with credit unions and, as part of that process, the Central Bank established sector stakeholder dialogues in November 2015 to facilitate engagement with credit unions. This is with a view to gaining a better understanding of how credit unions want to develop their business model and to identify any changes that may be required to the regulatory framework to facilitate prudent development.

There is a commitment to develop a business model and it involves the Central Bank connecting directly with certain credit unions. If I can facilitate that in any way, I will do so.