Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 58: To ask the Minister for Finance his views on the announcement by a bank (details supplied) that it is considering an increase in mortgage interest rates. [11448/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy will appreciate that the named covered institution is run as an arm's length operation and as such it is not appropriate for me to comment on how it manages its pricing strategies. I have stated publicly that I was disappointed by recent decisions and announcements by covered institutions to increase their variable interest rates but unfortunately such increases reflect commercial market realities including the increased cost of accessing funds.

The Guarantee means that the covered institutions can in fact raise funds more cheaply than they otherwise would. This is a benefit to all of their customers. All covered institutions pay the State for the costs of the Guarantee. Interest rates are at historically low levels and are likely to remain very low for the foreseeable future in overall terms and this has provided significant support for customers in the current challenging economic and financial environment.

Liz McManus (Wicklow, Labour)
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Question 59: To ask the Minister for Finance the progress made to date with the tender process for the strategic review of the Irish credit union sector; if the terms of reference for this strategic review have been framed; the terms of reference of same; the timeline for the completion of both the tender process and the completion of the report itself; if it is envisaged that new legislative measures will be needed arising from the preparation of this report; his views on the development of the credit union and co-operative banking sector here over the coming years; and if he will make a statement on the matter. [11636/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have requested the Financial Regulator to carry out this Strategic Review of the Credit Union Sector in Ireland. The Project is being managed by the Registrar of Credit Unions and my officials are to liaise closely with him throughout the project. With regard to progress, the Registrar has received expressions of interest and is in the process of finalising the Tender Document. He will then issue an invitation to tender to a short-list of tenderers. It is anticipated that the selection process will be completed by end-May 2010 and work will begin shortly thereafter. I expect to have a report on the full project by end-March 2011.

The Terms of Reference has not yet been finalised. The Registrar and my officials have had detailed discussions on a draft Terms of Reference. The final Terms of Reference will reflect any modifications required following dialogue with the selected consultancy firm. I am confident that the Financial Regulator will execute the project in accordance with public procurement guidelines and that the best techniques in project management will be utilised.

When I requested the Financial Regulator to carry out this review, it was in the knowledge that a review of credit union legislation is somewhat overdue. The Credit Union Act 1997 provides the legal framework for the regulation of credit unions. The Act was designed to provide the credit union movement with a regulatory structure that reflects and promotes the particular ethos and philosophy of the credit union movement, its strong tradition of volunteer service and the core objective of providing opportunities for saving and lending for members of credit unions. The approach to regulation embodied in the Credit Union Act 1997 has served the credit union movement well by providing clarity and certainty to individual credit unions, their directors and members. It has helped support the continued stability of the credit union movement and safeguard the members' savings during a period of rapid growth.

In relation to the further development of the credit union sector, the outcomes for this project will be to develop proposals and make recommendations for a modern credit union operational model, supported by an appropriate and enabling legislative and regulatory framework. This framework must reflect the needs of the credit unions and their members. It should be able to support the development of movement into the future.