Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank Senator Reilly for her amendment, which would provide for a memorandum of understanding between the Central Bank and credit unions. This issue was discussed in some detail on Committee Stage in the Lower House, when the Minister for Finance made it clear that he would be sticking with the Bill's current provisions. The bank has already published a consultation protocol for credit unions, as recommended by the Commission on Credit Unions. It is not appropriate to place the bank under a statutory obligation to enter into a memorandum of understanding.

The commission recommended that a consultation protocol should be in place between the Central Bank and credit unions. This protocol has been developed following consultation between the Central Bank, the Minister, credit union representative bodies and the Credit Union Advisory Committee, CUAC. The protocol was sent to all credit unions earlier last week and is being worked upon by all of the stakeholders, as requested under the commission's recommendation.

The protocol sets out how the Central Bank proposes to engage with credit unions in any formal consultation process prior to the introduction of new regulations, which is important. The protocol is in place and is fair in dealing with people. The protocol states that the bank is committed to having clear, open and transparent engagement with stakeholders in fulfilling its financial regulation and supervisory objectives.

The bank commits to engage formally and informally with credit union representative bodies and relevant stakeholders, as well as ensuring it complies with any relevant legal obligations relating to consultation. The bank will consult on new regulations that will have a significant impact on the business of credit unions. As part of the consultation process, the bank will invite credit unions, their representative bodies and other stakeholders to make written submissions on new regulations that will be reviewed and considered before regulations are made.

It has been suggested that a broader memorandum of understanding be agreed between the Central Bank and credit unions. I understand that one of the concerns driving this issue is an idea that the Central Bank should issue written directions. The Bill provides for this, as well as for an appeals mechanism. It is important to state that if people feel there is some unfairness in the way in which directions have been issued, there is an appeals mechanism which one could argue gives significant powers to the credit union sector if it is felt that a measure was being unfairly imposed.

I do not propose to follow the memorandum of understanding amendment and, as I stated earlier, it was not recommended by the commission. If this issue was of significance to the commission in making its recommendations, it would have been flagged. That was not the case. We should be careful not to undermine the independence of the regulator. We have all learned enough from the financial crisis to know that the Central Bank must be able to act within its own powers when required. As a result, I do not propose to accept the amendment.