Mary Upton (Dublin South Central, Labour)
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Question 147: To ask the Tánaiste and Minister for Finance his views on the fact that not all credit unions are covered by the deposit protection scheme, known as the saving protection scheme, operated by the Irish League of Credit Unions; the measures he is taking to ensure the deposits of savers with credit unions are protected; and if he will make a statement on the matter. [2346/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Irish League of Credit Unions (ILCU) has since 1989, operated a savings protection scheme (SPS) for credit unions. The SPS aims to protect the individual savings of members by ensuring that credit unions are financially and administratively sound and provides for savings protection for each individual credit union member.

ILCU have stated publicly that the savings protection scheme is open to all credit unions. It is important to note that under the SPS regime no member of a credit union has experienced any loss of shares and deposits and no credit union has become insolvent. The SPS has only been called upon in a very limited number of cases and it has never been necessary to make savings protection payments to individual credit union members. It is also important to note that sound prudential supervision by the Registrar of Credit Unions under the Credit Union Act, 1997 in ensuring the continuing solvency and liquidity of credit unions safeguards the interests of credit union savers.

In line with changes in the regulatory environment for financial services generally the need for modernisation of the credit union SPS has become evident over time. Section 46 of the Credit Union Act 1997 provides for approval of savings protection schemes by the Registrar of Credit Unions as the delegate of the Regulatory Authority. Once an approved scheme is in place under the Act it would be incumbent on all credit unions to participate. This highlights the importance of ensuring that an approved savings protection arrangement is consistent with the requirements of the credit union movement as a whole.

Proposals for reform of the SPS were the subject of discussions in early 2007 between the Registrar and ILCU. In November 2007 detailed proposals for the reform of SPS were submitted for approval. I have written to the Chairman of the Financial Regulator confirming my view that an approved savings protection scheme for all credit unions should be in place as soon as possible. In this respect the Chairman of the Financial Regulator has recently advised me that it is the intention of the Financial Regulator to deal with outstanding issues such as governance and funding arrangements for the scheme and to urgently find a solution to this issue. I will be monitoring progress towards this objective in the coming weeks.