Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 254: To ask the Minister for Finance the respective roles of his Department and the Financial Regulator in the formation of policy in key areas, specifically in the reform of credit union legislation; if his recent decision to ask the Financial Regulator to examine proposals on the savings protection scheme and to champion the reform of the regulatory framework for the credit union movement, involves an abdication of responsibility for policy information by his Department by bestowing such powers on the regulator; his views on whether this is appropriate in terms of the respective roles of both the regulator and his Department; and if he will make a statement on the matter. [38703/06]

Brian 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 provides the credit union movement with a regulatory structure that reflects and promotes 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. The role of my Department is to advise on ensuring that the legal framework for credit unions continues to be appropriate for the effective operation and supervision of credit unions. The Registrar of Credit Unions in the Financial Regulator is responsible for the administration of the regulatory and supervisory regime for credit unions under the Credit Union Act. The Registrar's powers in relation to the control and supervision of credit unions are set out in Part VI of the Credit Union Act. The purpose of supervision is twofold namely the protection of the funds of credit union members and the maintenance of the financial stability and well-being of credit unions generally. The Credit Union Advisory Committee (CUAC) — the statutory expert advisory body under the Credit Union Act — also provide advice and information to me on key regulatory issues for credit unions.

Approval for savings protection arrangements in credit unions is the responsibility of the Regulatory Authority under Section 46 of the Credit Union Act. In May 2006 the Financial Regulator agreed to examine proposals for the reform of the existing Savings Protection Scheme for credit unions and this commitment is included in the Financial Regulator's recently published three-year Strategic Plan.

The case for modernising the regulatory framework for credit unions has been raised by both the Registrar of Credit Unions and the representative bodies for credit unions. In this context, it is important that there is a clear shared understanding on how a new regulatory framework would operate, before moving to develop specific proposals for further consideration by my Department, drawing on the advice of CUAC. Consequently, I wrote to the Chair of the Financial Regulator earlier this year recommending that the Financial Regulator engages with the credit union movement, in the first instance, to identify common ground in relation to a set of principles that could guide the development of an updated regulatory framework for credit unions. The Chair of the Financial Regulator has indicated the Authority's willingness to move forward on this basis and I look forward to considering the proposals that emerge from these considerations.

I consider that the consultative approach adopted in this instance which is fully consistent with the principles of Better Regulation is essential to ensuring that any proposals with implications for the reform of the regulatory and legislative framework for credit unions are fully informed by the views of both the credit union stakeholders and the Regulatory Authority.