Written answers

Tuesday, 28 February 2006

11:00 pm

Paul McGrath (Westmeath, Fine Gael)
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Question 87: To ask the Minister for Finance his plans to change policy in order to facilitate the development of credit unions; and if he will make a statement on the matter. [7993/06]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Credit Union Act 1997 provides the legal framework for the regulation of credit unions. The Act was designed to provide the credit union movement with a regulatory structure that reflected and promoted the particular ethos and philosophy of the credit union movement, its strong tradition of volunteer service and the core objective of providing opportunities for saving and lending for members of credit unions. In the context of this legislative framework, the Registrar of Credit Unions, within the Financial Regulator, is responsible for the operation of the regulatory and supervisory regime for credit unions.

The Credit Union Act has provided the legal and regulatory framework within which the credit union movement in Ireland has continued to grow and develop over recent years. The assets of credit unions, largely comprising members' savings, have increased to €11.5 billion. This highlights the continued success of credit unions in meeting the financial needs of local communities and occupational groups falling within the common bond.

The rules-based approach to the regulation embodied in the Credit Union Act has served the credit union movement well by providing clarity and certainty to individual credit unions, their directors and members. It has helped support the continued stability of the credit union movement and safeguard the members' savings during a period of rapid growth. The Act does provide a significant amount of discretion to the Registrar of Credit Unions in relation to specific regulatory requirements acting either on his own initiative or in the context of regulations made under the Act.

As Minister of Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions in light of the current state of development, capacity and capabilities of credit unions as a whole. A range of issues now arising in that context, including savings protection, investment rules and proposed legislative and regulatory changes, is currently under examination by my Department with the assistance of the Registrar of Credit Unions and are the subject of consultations with the representative bodies for credit unions.

I can assure the Deputy that these issues will be assessed on their own merits with a view to establishing an appropriate balance in the regulation of credit unions between the need to facilitate credit unions in adapting to the changes taking place in Irish society and ensuring the stability and financial sustainability of credit unions and the safeguarding of the very significant savings entrusted to them by their members.

My decisions in these matters will be based on the advice and information provided by the Registrar of Credit Unions, the Credit Union Advisory Committee, CUAC — the statutory advisory body on credit union matters — and the credit union movement itself.

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