Michael McGrath (Cork South Central, Fianna Fail)
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23. To ask the Minister for Finance the current position in relation to the assessment of the health of the credit union sector; the issues that have been identified; the timeline for action; if further financial resources will need to be available to the sector; and if he will make a statement on the matter. [8383/14]

Michael Noonan (Limerick City, Fine Gael)
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The Government established the Commission on Credit Unions in May 2011 to make recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members' savings and financial stability. The Commission  published its final Report in March 2012 and identified the financial position of credit unions in Ireland, stating that the declining fortunes of the Irish economy have not only put an additional brake on credit union development but have contributed to regression in some credit unions. To address this the Commission set out a wide range of measures, including, specifically in relation to the stability of the sector, recommendations regarding restructuring, stabilisation and resolution.

A core recommendation was that the sector be restructured on a voluntary, incentivised and time-bound basis to enable credit unions benefit from economies of scope and scale. The Government contributed €250 million to the Credit Union Fund in December 2012 to support the restructuring of the credit union sector which is being overseen and facilitated by the Credit Union Restructuring Board - ReBo. Any funding provided to credit unions will be on a recoupable basis. ReBo is working to the timetable set out in the Commission's report and is expected to complete its work by the end of 2015.

The Commission also recommended that a statutory stabilisation fund be established to address problems in credit unions that are under-capitalised but are otherwise viable. The statutory basis for stabilisation is in place under the Credit Union and Co-operation with Overseas Regulators Act 2012 and my Department will begin consultation on the introduction of the stabilisation levy this month. The target is to have a stabilisation levy in place by end quarter 2 2014.

Another recommendation  of the Commission was that the powers provided by the Central Bank and Credit Institutions (Resolution) Act 2011 should be considered for those credit unions that meet the conditions or grounds as set out in that Act. The Government has provided resolution funding of €250 million. Funding will be based on recoupment over the medium term by a levy under the Central Bank and Credit Institutions (Resolution) Act 2011.

The Credit Union and Co-operation with Overseas Regulators Act 2012 implements over sixty of the Commission's recommendations which will help underpin the stability of the sector. The Act contains measures to reform and strengthen credit unions over four broad areas namely: Prudential regulation; Governance measures; Restructuring and  Stabilisation.  The Act is being commenced in accordance with the published Implementation Plan, which allows credit unions sufficient time to prepare for these changes.

I am satisfied that these measures, together with governance and regulatory changes, introduced on foot of the Commission Report will underpin a stable credit union sector into the future.