Bernard Allen (Cork North Central, Fine Gael)
Link to this: Individually | In context

Question 99: To ask the Minister for Finance if he is satisfied with the progress being made to find a satisfactory system for deposit protection in credit unions. [21856/08]

Brian Lenihan Jnr (Dublin West, 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.

Section 46 of the Credit Union Act 1997 provides for approval of savings protection schemes by the Registrar of Credit Unions. Initial ILCU proposals for reform of the SPS were the subject of discussions in 2007 between the Registrar and ILCU resulting in the submission of detailed revised proposals for the reform of SPS in November 2007.

Following the Registrar's assessment of these revised proposals he identified to ILCU in April 2008 outstanding issues which remained to be considered more fully relating to independence of the proposed company, funding of the scheme, stabilisation, regulation of the fund, regulatory powers and the need for consensus among credit unions.

As far as progress in finalising savings protection arrangements for credit unions is concerned, the Registrar of Credit Unions has recently advised my Department that he will make every effort to reach an agreement with ILCU on the basis of the resolution of the issues he has highlighted in relation to their reform proposal which would enable approval of the SPS under the provisions of Section 46 of the Credit Union Act, 1997. This is consistent with the objective in the Financial Regulator's Strategy Statement to conclude work during 2008 with a view to having an approved SPS in place as soon as possible.

The Deputy will wish to note that discussions between the Registrar and ILCU on the outstanding SPS issues commenced on 12 May last. While important issues remain to be determined it is hoped that the discussions will be concluded shortly with a view to having approved savings protection arrangements in place for credit unions under the provisions of the Credit Union Act comprising both savings protection for credit union savers and stabilisation arrangements for individual credit unions in appropriate circumstances.