Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

Question 108: To ask the Minister for Finance if he plans to index section 35 of the Credit Union Act 1997 in view of the current climate when longer repayment schedules may be needed by borrowers; and if he will make a statement on the matter. [22371/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

A core objective of the legislative and regulatory framework for Credit Unions in Ireland is to ensure the safety and soundness of credit unions. This requires prudent lending and investment decisions by Boards of credit unions to safeguard members' savings. The restrictions contained in Section 35 of the Credit Union Act 1997, as amended, are an important asset and liability tool for credit unions as the funding of credit unions is predominantly provided on a short term basis in the form of on-demand savings and consequently the limits on longer term-term lending are necessary.

I am aware that credit unions are seeking to facilitate revised repayment instalments for credit union members currently experiencing difficulty in meeting loan repayments due to unfavourable changes in their financial circumstances but that these endeavours, in certain circumstances, run up against the current Section 35 limits on longer-term lending. Subject to the over-arching considerations that the financial position of a credit union, the security of members' savings and accurate reporting of the financial status of a credit union is maintained, it should be possible to explore all reasonable steps to allow a member, in carefully monitored and controlled circumstances, to re-schedule their repayments to a level which is affordable to them. Of course, each credit union must fully and properly recognise arrears situations where they exist, and where members are in difficulty the process of facilitating them must be transparent to board members and regulators so that a credit union is never in doubt as to its own position.

I have asked my Department to reconvene the Group, representative of stakeholders, the Regulatory Authority and my Department, which successfully reviewed the Section 35 lending limits in 2006. The mandate for this Group will be to find a solution to this complex issue.