Written answers

Tuesday, 3 December 2013

Department of Finance

Credit Unions Regulation

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Independent)
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65. To ask the Minister for Finance the total number of staff in the Central Bank who are responsible for overseeing credit unions that have been paid employees of credit unions or volunteers in credit unions; and if he will make a statement on the matter. [51450/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I have been informed by the Central Bank that it does not store the specific information requested by the Deputy. However, I have been informed that staff employed in the Registry of Credit Unions, which is responsible for overseeing credit unions, have a range of backgrounds including accounting, economics, legal and compliance. The Registry of Credit Unions ensures on appointment, that all staff are suitably qualified for their role. Under section 15(10) of the Credit Union and Co-Operation with Overseas Regulators Act 2012, which is due to commence in March 2014, an officer* or other member of the Central Bank who is involved in the regulation of credit unions is not eligible to become a director of a credit union.

* Within the meaning of section 2 of the Central Bank Act 1942

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Independent)
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66. To ask the Minister for Finance if he will provide the title of the person in the Central Bank who has ultimate responsibility for oversight and imposing restrictions on lending within credit unions; the level at which staff in the Central Bank have the authority to make decisions regarding lending restrictions; if he will provide the criteria assessed to determine specific lending restrictions that may be imposed on certain credit unions but not others; and if he will make a statement on the matter. [51451/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions - RCU - who is the independent regulator for credit unions at the Central Bank. Within her 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. I have been informed 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 criteria assessed to determine the imposition of lending restrictions includes, but is not limited to the following:

- Prudential returns which are unaudited returns, submitted to the RCU;

- Financial ratios which cover level of arrears and provision coverage; and

- The governance framework within the credit union.

Decisions on regulatory restrictions which are imposed in the form of directions under the Act are made by the Registrar. Other regulatory restrictions may be imposed as part of on-going supervisory engagement. These may be dealt with by the Registrar, but they may also be dealt with by a member of the management team, depending on the issue.

Credit union lending restrictions currently in place are reviewed on a regular basis to determine whether they are still set at appropriate levels. Lending restrictions are typically given effect by regulatory directions. As from 1 August 2013 regulatory directions are appealable to the Irish Financial Services Appeals Tribunal - IFSAT.

Overall in the current environment, in relation to lending, all credit unions are required to ensure that they apply enhanced scrutiny to all new loan applications and that all applications are fully assessed to determine the borrower’s ability to repay. Credit unions are also required to ensure that they put in place clear limits on the total funds available for granting loans, bearing in mind the need to ensure that a credit union maintains adequate levels of liquidity to support its operations.

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