Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 18: To ask the Minister for Finance if he views credit unions in the same way as he sees banks; and if they require a similar or different form of regulation. [27656/11]

Michael Noonan (Limerick City, Fine Gael)
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In recognition of the unique nature of credit unions, a statutory position of Registrar of Credit Unions was explicitly created within the Central Bank of Ireland to assume responsibility for the regulation of credit unions. The Registry of Credit Unions is responsible for the registration, regulation and supervision of credit unions. This will continue to be the position. In the Programme for Government 2011-2016, the Government stated that it recognises the important role of credit unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions. In line with the Government commitment, we established a Commission on Credit Unions to review the future of the credit union movement and make recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect depositors savings and financial stability. The Commission has provided me with an interim report which I am currently examining. The Report specifically addresses the differences between credit unions and banks. The Commission will have completed its work by end-March 2011.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 19: To ask the Minister for Finance the number of credit unions that have had lending restrictions imposed on them by the Financial Regulator on a monthly basis in the years 2010 and 2011; the kinds of restrictions imposed; and his views on whether these restrictions were being applied consistently. [27655/11]

Pearse Doherty (Donegal South West, Sinn Fein)
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Question 20: To ask the Minister for Finance the criteria currently being used by the Financial Regulator in imposing restrictions on the individual and general lending capacity of credit unions; if in view of this information his views that these restrictions are being applied fairly and consistently; and if he believes this process to be adequately transparent. [27654/11]

Pearse Doherty (Donegal South West, Sinn Fein)
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Question 41: To ask the Minister for Finance if his attention has been drawn to the restrictions being placed by the Financial Regulator on the general and individual lending capacity of credit unions across the country; his views on these restrictions; if he views these restrictions as having a negative impact on the viability of individual credit unions and overall consumer spending. [27653/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 19, 20 and 41 together.

I am aware that the Registrar of Credit Unions has imposed lending restrictions on a number of credit unions in recent months.

The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for the sector. The Registrar is responsible for administering the system of regulation and supervision of credit unions provided for 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.

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.

Within his independent regulatory discretion, the Registrar of Credit Unions acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. It is on this basis that the Registrar has put in place lending restrictions on credit unions as their financial position has deteriorated. Restrictions are imposed on a case-by-case basis and are reviewed regularly. Before setting the level of restriction on a credit union the Registrar carries out an analysis of the credit union business and financial position and the restrictions are designed to allow these credit unions to continue to lend, albeit at a more prudent level, in order to protect the savings of their members. The Registrar will give priority to protecting the savings of credit union members and to maintaining financial stability.

With regard to the impact of these restrictions, the Registrar advises me that they are structured to allow credit unions to lend a higher number of small value loans to the broader membership, thereby reducing concentration risk. He also advises that initial analysis indicates that the credit unions which are restricted continue to have higher levels of arrears than those which are not and this remains a concern. The Registrar closely monitors and interacts with those credit unions where lending restrictions have been imposed.

The restriction on a credit union is determined taking account of its financial data including the level of its lending, average loan size, its arrears trends and bad debt provision levels. Credit unions are able to continue to lend to members within their financial capacity to do so. If a credit union can demonstrate an improved financial position then such restrictions can be reviewed.

The imposition of these restrictions is not considered lightly and the type of lending restrictions imposed takes account of the particular business profile and financial position of each credit union concerned. The type of lending restrictions can include maximum individual loan size and overall maximum monthly lending limits. As regards the number of lending restrictions imposed each month in 2010 and 2011, the Registrar has advised me that this is confidential regulatory information and it is not his policy to release it into the public domain. He can say however that lending restrictions have been imposed on in excess of 50% of credit unions at this time. Where lending limits are specified for individual credit unions, this is communicated directly with the credit union.

It would not be appropriate for me, as Minister for Finance, to examine or adjudicate on whether the placing of lending restrictions is necessary on a case by case basis. I believe that such action would represent interference in the work of the independent financial regulator.