Ciara Conway (Waterford, Labour)
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Question 164: To ask the Minister for Finance if his attention has been drawn to the variety of lending restrictions that have been imposed by the Registrar of Credit Unions and the impact of these restrictions for credit unions and members; if it has been brought to his attention that the nature of these restrictions often means that good lending to good members cannot be made, in turn threatening the viability of credit unions by reducing the income from interest repayments on loans; if the new lending restrictions can be re-examined and applied on a more discerning basis in a way that provides credit unions with a clear rationale for any restrictions; and if he will make a statement on the matter. [2586/12]

Michael Noonan (Limerick City, Fine Gael)
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The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for credit unions. Within his independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. This is part of normal regulation and supervision of the sector. 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. 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 regulator.

The Registrar has put lending restrictions in place in order to protect the savings of members in credit unions and to ensure that credit unions focus on risks when making lending decisions. Restrictions are imposed on a case-by-case basis and are reviewed regularly. The type of lending restrictions can include maximum individual loan size, overall maximum monthly lending limits and restrictions on business lending.

The Registrar has advised that about 50% of credit unions are subject to lending restrictions at present. Almost all credit unions with a lending restriction have a maximum individual loan size restriction. Of the credit unions with lending restrictions over 65% can lend €20,000 or more to an individual member.

Less than 3% of credit unions are restricted to loans of less than €10,000 to an individual member, and less than 1% of credit unions are restricted to lending less than €5,000 per member. Commercial lending restrictions apply to approximately a third of credit unions. As part of the work to build liquidity levels in the credit union sector, the Central Bank introduced maximum monthly lending limits in a number of credit unions. Currently, maximum monthly lending limit restrictions are in place in a small proportion of credit unions.