Pat Rabbitte (Dublin South West, Labour)
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Question 129: To ask the Minister for Finance his views on calls from the Credit Union Development Association for a State savings protection scheme; and if he will make a statement on the matter. [39231/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is no State savings guarantee for savers with Irish credit institutions generally. There is, however, a deposit protection scheme funded by credit institutions (other than credit unions) which are authorised by the Central Bank and Financial Services Authority of Ireland. The Deputy should note that a key principle underlying the operation of the deposit protection scheme is that the full cost of financing the scheme must be borne by the participating credit institutions.

The level of contribution required from each credit institution is 0.2% of deposits held at all branches of the credit institution in the EEA, including deposits on current accounts and share accounts with a building society (but excluding certain other specified deposits). Contributions are maintained in a Deposit Protection Account at the Central Bank and Financial Services Authority of Ireland. The European Communities (Deposit Guarantee Schemes) Regulations, 1995 set out the terms and conditions governing deposit protection in Ireland.

In the case of credit unions the Irish League of Credit Unions operates a separate Savings Protection Scheme (SPS). The SPS aims to protect individual savings of members by making sure that the credit unions are financially and administratively sound and by providing remedial help to any participating credit union which shows signs of weakness in these areas. Savings of individual credit union members are also protected. The operation of the credit union SPS is consistent with the specific regulatory approach adopted for credit unions under the Credit Union Act, 1997 which is differentiated from that applying to mainstream commercial financial institutions on account of the unique ethos and philosophy of the credit union movement. In this context, the 32 county all-island basis of the current SPS is valuable and one that is important to maintain. In May 2006 the Financial Regulator agreed to examine proposals for the reform of the existing SPS for credit unions.