Simon Coveney (Cork South Central, Fine Gael)
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Question 156: To ask the Minister for Finance his plans to amend the Credit Union Act and regulations which have hampered their development. [4129/07]

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 was designed to provide 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 approach to regulation embodied in the Credit Union, 1997 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. As Minister for Finance, my role is to ensure that the legal framework for credit unions continues to be appropriate for the effective operation and supervision of credit unions. In this context, there have been a number of developments over the last 12 months.

Earlier this week I published the Report of the Review Group on longer-term lending limits as provided for by section 35 of the Credit Union Act 1997. The Report recommends that Section 35 lending limits should be increased for loans over five years from 20% to 40% and over ten years from 10% to 15%, for those credit unions approved by the Registrar of Credit Unions as having the necessary controls and safeguards in place and satisfying financial criteria in relation to arrears and reserves. The legislative changes necessary to implement the report will be introduced in the coming months.

I have also introduced regulations to increase the amount of money that members can deposit with a credit union, as well as increasing the limits that a person can hold between deposits and shares. In addition, I have increased the limits in relation to nomination of property in a credit union and provision for small payments on death. Furthermore, following consultations with the representative bodies of credit unions and drawing on the advice of the Credit Union Advisory Committee — the statutory expert advisory body on credit union matters — in October of last year the Registrar of Credit Unions issued guidelines on a revised investment framework for prudent and responsible investment by credit unions.

As the Deputy may be aware 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. It is important that there is a clear shared understanding on how a new regulatory framework would operate, before moving to develop specific proposals. In this context, I wrote to the Chair of the Financial Regulator last 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 understand that the Registrar of Credit Unions has arranged consultations with the Irish League of Credit Unions and the Credit Union Development Association on this issue.

Finally, it should be noted that the Registrar of Credit Unions at my request is actively examining proposals for reform of the Irish League of Credit Unions Savings Protection Scheme for credit unions. My Department understands that a schedule of meetings and a work programme has been agreed with a view to concluding this process at an early date.