Trevor Sargent (Dublin North, Green Party)
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Question 94: To ask the Minister for Finance if recent announced measures extending the capacity of credit unions are the extent to which he will allow reforms of this sector; and his plans to introduce amending legislation. [10163/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The legal framework governing the regulation of credit unions is provided by the Credit Union Act, 1997. The Act has served credit unions well providing stability and legal certainty during a period of substantial development and growth in the assets of the movement. As a result of this development and changes in the financial environment generally, the need for some modernisation of the legislative and regulatory framework for credit unions has became evident over time.

The recent announcement of my intention to legislate for increased lending limits for credit union loans referred to in the Deputy's question is one of several initiatives that I have taken to update and modernise the regulatory framework for credit unions. On 9 March last, I introduced Regulations enabling Credit Unions to provide Personal Retirement Savings Accounts to their members. This is an important measure both developing the role of credit unions and also supporting the important public policy objective of increasing personal pension coverage.

In February, I published the report of the Review Group on longer-term lending limits in credit unions which recommended that the limits on longer-term lending under Section 35 of the Credit Union Act, 1997 should be increased. This addresses an issue which has been identified by the credit union movement as a significant obstacle to meeting their members' borrowing needs.

Last year my Department drawing on the advice of the Credit Union Advisory Committee — the expert statutory advisory body on credit union matters — assisted the Financial Regulator and the representative bodies for credit unions in agreeing revised investment guidelines for credit unions which were issued by the Registrar of Credit Unions in October 2006. These guidelines will help support prudent and responsible investment behaviour by credit unions. In addition, in August 2006, I introduced Regulations to increase the maximum level of shares and deposits that can be saved in a credit union. This change introduced with the approval of the Financial Regulator was required to update the limits included in the 1997 Act to take account of growth in the economy over the preceding decade and help maintain the attractiveness of credit unions for members' savings.

I have highlighted the importance of the reform of savings protection arrangements for credit unions to the modernisation and change process for credit unions. In this context, a detailed set of proposals to reform the existing Savings Protection Scheme (SPS) for credit unions was submitted to me by the Irish League of Credit Unions in January 2006 and furnished by my Department to the Financial Regulator in March 2006. The Financial Regulator is currently examining the specific changes which may be needed in the proposals which could allow the reformed SPS to be approved with a view to finalising this matter shortly.

As far as the broader modernisation of the legislative framework for credit unions is concerned, my Department has also asked the Registrar and Credit Unions to agree a set of principles with the representative bodies for credit unions that can help guide the development of the regulatory approach for credit unions to support the long-term sustainability of the credit union movement in Ireland. All of these issues have been advanced on the basis of consultation and dialogue with the representative bodies for credit unions and the Financial Regulator. The progress achieved demonstrates my commitment to the success and the long-term development of credit unions in Ireland.