Liz McManus (Wicklow, Labour)
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Question 118: To ask the Minister for Finance if he has plans to introduce a list of restricted risky investments which credit unions will be advised against purchasing; and if he will make a statement on the matter. [21956/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. The Registrar of Credit Unions is responsible for administering the system of regulation and supervision of credit unions provided under the Credit Union Act, 1997 with a view to the protection by each credit union of the funds of its members, and the maintenance of the financial stability of credit unions generally.

Under the legislative framework set out in the Credit Union Act the primary function of credit unions is to offer savings and loans services to its members. In view of the very significant growth over recent years in shares and deposits in many credit unions over and above what is required for their lending activities, significant resources have been available for investment by credit unions to generate a return for members. Credit union investments are governed by Section 43 of the Credit Union Act, 1997 which restricts investments to those which trustees are authorised to invest in under the Trustee (Authorised Investment) Order 1998. The Registrar of Credit Unions also has powers under Section 87 (3) (b) of the Credit Union Act to give a regulatory direction to a credit union, if he deems it appropriate in the interest of members, to limit investments of a specified class or description.

The Board of Directors of each individual credit union is responsible for ensuring that its investment policy is prudent and responsible and conforms to what is legally permissible under the Credit Union Act. In order to assist Boards in effectively discharging this important function, in October 2006 the Registrar of Credit Unions issued a detailed Guidance Note on Investments to help safeguard the risk profile of credit union investments and ensure that members' savings continue to be protected. This provides the basis for monitoring the investment activities of credit unions by the Registrar. Following the changes in financial market conditions for investments since August 2007 the Registrar of Credit Unions on foot of a request from my Department has initiated a process, including consultation with stakeholders, with a view to revising the existing investment framework. This review will be informed by such factors as recent market developments and an assessment of the investment activities of credit unions overall. The Registrar has undertaken to keep my Department informed of progress.