Patrick Nulty (Dublin West, Labour)
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To ask the Minister for Finance if he will ensure the concerns of credit union members are addressed in the Credit Union Bill as set out in correspondence (details supplied); and if he will make a statement on the matter. [58061/12]

Michael Noonan (Limerick City, Fine Gael)
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The Credit Union and Co-operation with Overseas Regulators Act 2012 was signed into law by the President on 19 December 2012 and its provisions in relation to restructuring and stabilisation have been commenced. The Act implements over 60 of the recommendations of the Final Report of the Commission on Credit Unions, which was agreed over a nine-month period by all Commission members, including credit union stakeholders.

The Act was passed by both Houses following a positive and constructive debate, in the course of which I took on board a number of amendments to reflect issues raised by credit union representatives where these did not compromise important principles in the legislation.

Among the amendments were the following:

- Term limits were increased from 9 years out of 15 years to 12 years out of 15 years;

- A number changes to exclusions from board membership;

- The definition of financial services legislation was amended so that it is now clear that it refers to that legislation as it applies to credit unions; and

- the list of classes of investment that a credit union may invest in under Central Bank regulations now specifically refers to public investment projects.

I have also made it clear that regulatory directions to credit unions under the Central Bank (Supervision and Enforcement) Bill will be made appealable to IFSAT.

The Government has made its position clear regarding its support for shared services and there is nothing in the Act to prevent this. However, on the issue of shared branching, I have commissioned a report from the Credit Union Advisory Committee (CUAC) which is to be submitted to me by the end of Q2 this year.

I would like to point out that there is no statutory obstacle to a credit union providing electronic payment accounts and many already do so; therefore, no change to the Act was required in respect of that issue.

The Question also refers to the development of a Memorandum of Understanding between the Central Bank and credit unions. The Central Bank has recently developed a consultation protocol for its engagement with the credit union movement. This protocol has been developed following consultation between the Central Bank, the Minister, credit union representative bodies and the Credit Union Advisory Committee. The protocol sets out how the Central Bank proposes to engage with credit unions in any formal consultation process prior to the introduction of new regulations and states that the Bank is committed to having clear, open and transparent engagement with stakeholders in fulfilling its financial regulation and supervisory objectives. In the course of the debate on the Act, I made it clear that I do not favour a statutory MoU and nor was one recommended by the Commission. We should be careful not to undermine the independence of the Central Bank must which must be able to act within its powers when required.

The Commission Report recommends that in order to ensure that the role and responsibilities of the board and management do not overlap and that board members have governance rather than executive responsibilities, the role of treasurer should be removed. In line with this, the Act removes the role of treasurer and assigns the relevant executive responsibilities to the management of the credit union. However, the Act was amended so that the Board takes on the role of presenting the accounts to a credit union’s members.

In relation to the tiered regulatory approach, the Act provides that requirements are to be set according to the “nature, scale and complexity” of credit unions or categories of credit unions so that tiering will not be limited to considerations of size alone.