Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

Question 29: To ask the Tánaiste and Minister for Finance if he is satisfied with the progress being made to find a satisfactory system for deposit protection in credit unions. [15680/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

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. 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. The Deputy may wish to note the role of sound prudential supervision of credit unions by the Registrar of Credit Unions under the Credit Union Act 1997 in ensuring the continuing solvency and liquidity of credit unions and the safeguarding of the interests of credit union savers.

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.

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. Proposals for reform of the SPS were the subject of discussions in 2007 between the Registrar and ILCU resulting in the submission of detailed proposals for the reform of SPS in November 2007. 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 advised me that it is the intention of the Financial Regulator to deal with outstanding issues on SPS and to urgently find a solution to this issue. I am further advised by the Registrar of Credit Unions that he has arranged to hold further discussions with ILCU on reform of the savings protection arrangements for credit unions in an effort to bring this matter to a satisfactory conclusion as soon as possible.