Richard Bruton (Dublin North Central, Fine Gael)
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Question 297: To ask the Minister for Finance the premium which is proposed for credit unions to cover the cost of the Government guarantee of deposits up to €100,000; if he has developed an agreement for the future operation of the savings protection scheme; and if he has convened the working group on the credit union legislative framework. [33733/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Government has given legal effect to the announcement of 20 September 2008 to extend the deposit guarantee scheme to credit union savers. This was done by the enacting of the Financial Services (Deposit Guarantee Scheme) Act 2009 and the European Communities (Deposit Guarantee Schemes) (Amendment) Regulations 2009 last June. This measure has had a very significant effect in providing reassurance to credit union members that their savings are secure.

The next step is for me, as Minister for Finance, to make an order under section 12(2) of the Financial Services (Deposit Guarantee Scheme) Act 2009 bringing section 4 of the Act, dealing with the amount to be held in the Deposit Protection Account, into operation for credit unions. The Department is considering this in consultation with the Central Bank and Financial Services Authority of Ireland and a decision will be taken as soon as possible.

Alongside my announcement of 20 September 2008, I indicated that it was intended that the guarantee which was being announced for credit institution savers would act as a backstop to an approved stabilisation scheme for credit unions. I believe that approved stabilisation arrangements are important to the continued stability of the credit union movement as they will act as the first port of call in the event of a credit union experiencing significant financial stress. My Department will, of course, continue to work with the Registrar and the representative bodies to support the achievement of this objective.

The legal framework governing the regulation of credit unions is provided by the Credit Union Act 1997. The Act has served credit unions well providing stability and legal certainty during a period of substantial growth and development of the movement. As a result of this development and changes in the financial environment generally, the need for some modernisation of the legislative and regulatory framework for credit unions has become evident over time. There is consensus among all stakeholders that the current legislative framework needs reform. While some important preparatory work has already been carried out in this regard there is, however, no clear consensus at this stage on the future shape of the reformed legislative framework for credit unions. I have asked the Chair of the Financial Regulator to initiate a review of credit unions which it is hoped will make an important contribution to identifying the appropriate way forward.