Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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To ask the Minister for Finance if he will provide an update on the lending restrictions being placed by the Registrar of Credit Unions on credit union lending including the total number of credit unions to which these restrictions apply and the nature of the restrictions currently being applied. [50521/12]

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. 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.

The Registrar of Credit Unions advises me that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns about the operation of these individual credit unions and the resultant risk to members’ savings. The number of lending restrictions is a reflection of the Registrar’s concerns about lending practices in the sector.

The Registrar has advised that currently about 57% of all credit unions are subject to lending restrictions. Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction. Of the credit unions with lending restrictions, over 68% can lend €20,000 or more to an individual member which is a sizeable amount and should cover most circumstances.

Fewer than 2.5% of credit unions are restricted to issuing loans of less than €10,000 to an individual member, and fewer than 1% of credit unions are restricted to issuing loans of less than €5,000 per member. These are the cases where the Registrar has more significant concerns in terms of risk to members’ savings.

Commercial lending restrictions apply to approximately 40% of credit unions reflecting the need to limit credit union exposure to higher risk lending where skills and expertise are not adequate.

The Registrar has also advised that individual credit union lending restrictions currently in place are reviewed on a regular basis to determine whether they are still set at appropriate levels.