Seán Ó Fearghaíl (Kildare South, Fianna Fail)
Link to this: Individually | In context

Question 225: To ask the Minister for Finance if he will consider correspondence (details supplied). [15762/10]

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

The concerns outlined in the correspondence enclosed by the Deputy refer to the need to update legislation governing the operation and regulation of credit unions in Ireland and to the proposal to amend Section 35 of the Credit Union Act 1997 which imposes limits on credit unions in relation to longer-term lending.

With reference to credit union legislation, I agree that the current legislative framework needs reform. Accordingly, I have requested the Financial Regulator to initiate a strategic review of the credit union sector in Ireland. This project, which is already underway, will involve an examination of the structure, operation, regulation and legislation of the credit union sector. It will provide a report making recommendations, including specific proposals to strengthen prudential soundness, which will advise and inform an assessment of the future strategic direction of credit unions.

The restrictions contained in Section 35 of the Credit Union Act 1997 are an important asset and liability instrument protecting the financial stability of the credit union movement over many years. The need for such a mechanism will be addressed in the strategic review but in the immediate future it is necessary to address ongoing issues with regard to Section 35 now. The matter was considered by my Department following consultation with the two Credit Union representative bodies - the Irish League of Credit Unions and the Credit Union Development Association - and with the Registrar of Credit Unions, and a provision has been included in the Central Bank Reform Bill 2010 which was read for the second time in Dáil Éireann this afternoon.