Ciarán Lynch (Cork South Central, Labour)
Link to this: Individually | In context

Question 72: To ask the Minister for Finance his views on whether debit card transactions are third party electronic payments exempted under SI 838/2007; if he will confirm that credit unions are associated members of the Irish Payment Services Organisation and will be included in any programme to promote a basic payment account to the unbanked; and if he will make a statement on the matter. [6050/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

Section 48 of the Credit Union Act 1997 provides that a credit union may offer additional services to its members subject to these services appearing to the Central Bank of Ireland to be of mutual benefit to its members. Each credit union is required to apply to the Registrar of Credit Unions for permission to provide the service. However, in cases where a service appears to the Central Bank to generally involve no risk to the assets of the credit union or the funds of its members, the Minister for Finance has powers under Section 48(2) of the Act to make regulations under Section 182, exempting such a service from the requirement to have the separate prior approval of the Registrar.

Statutory Instrument 838/2007

SI 838/2007 sets out the Credit Union Act 1997 (Exemption from Additional Services Requirements) (Amendment) Regulations 2007. These regulations were made by the then Minister for Finance under Section 182, following consultations with the Registrar of Credit Unions. They provide that individual credit unions can offer any service whereby a credit union member may arrange to have transferred to or from his or her account third party payments by way of electronic funds transfer or otherwise, without requiring the prior approval of the Registrar of Credit Unions at the Central Bank.

The Deputy asks if debit card transactions are exempted under this provision. Debit card transactions cover a broad range of services. The Registrar of Credit Unions advises that, while in general it may be reasonable to expect that debit card transactions would be third party electronic payments, it is not possible to be definitive on this for all circumstances. In addition to the provision of such services being required to meet the requirements under SI 838/2007, credit unions are also required to meet all legislative and regulatory requirements under the Act including the provisions set out in Section 32 (3) of the Act, relating to restrictions on withdrawal of members' savings.

It is up to each credit union to ensure, in the context of the specific nature of the particular debit card transactions proposed, that any service provided to their members is in accordance with the provisions set out in the Credit Union Act 1997. As set out in the Registry of Credit Unions' circular to all credit unions sent on the 27 January 2010, any credit union considering providing new card services (such as ATM cards, Debit Cards, Prepaid Debit Cards) to their members is required to contact the Registry of Credit Unions prior to developing any such services.

The Irish Payment Services Organisation

The Irish Payment Services Organisation (IPSO) is a private representative industry body. I understand that some, but not all, credit unions are associate members of IPSO. The question of their membership is, however, a private issue and is not a matter for me as Minister for Finance.

Government programme to promote a basic payment account

The Final Report on the Strategy for Financial Inclusion which was published on my Department's website in March 2011 identified that the credit unions have the potential to play a key role in the provision of the basic payment account and in the promotion of financial inclusion in the future when they have the necessary technology, infrastructure and legislative framework to handle these services. The Commission on Credit Unions is examining the issue of 'social lending' and how credit unions can play a role in providing financial services and products to meet the needs of low income groups and the unbanked.