Pearse Doherty (Donegal South West, Sinn Fein)
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18. To ask the Minister for Finance the potential he believes exists for the credit union movement to offer competition in areas traditionally dominated by banks such as mortgage lending. [13099/15]

Michael Noonan (Limerick City, Fine Gael)
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I have been informed by the Central Bank that credit unions are currently not prohibited from providing mortgages to members. Mortgages are currently subject to the maturity limits contained in section 35(2) of the Credit Union Act, 1997 which sets out the percentage of a credit union's loan book that can be outstanding for periods exceeding both five and ten years, as well as limits on the maximum outstanding liability to an individual member.

The Commission on Credit Unions in its Report recommended that some credit unions should be permitted to develop a more sophisticated business model. On 27 November 2014, the Central Bank issued a consultation paper - CP88 - Consultation on Regulations for Credit Union on commencement of the remaining sections of the 2012 Act. This consultation paper contains a number of draft regulations including draft lending regulations. Under these draft lending regulations credit unions can continue to provide mortgages. Existing maturity limits that are currently contained in section 35 of the 1997 Act are included in the draft lending regulations. A maximum maturity limit of 25 years is introduced in the draft regulations.  The draft lending regulations also include a large exposure limit on the maximum exposure a credit union may have to a borrower or a group of borrowers who are connected. The Central Bank will publish a feedback statement taking account of submissions received and propose to introduce the new regulations in December 2015. 

The Central Bank has introduced new regulations on residential mortgage lending, under section 48 of the Central Bank (Supervision and Enforcement) Act 2013 and the Housing Loan Requirements Regulations 2015.  The Regulations, which came into effect on 9 February 2015, apply to mortgage lending by regulated financial services providers (including credit unions) in the Irish market.

Where a credit union is providing mortgage lending, it is vital that a credit union ensurs that it has the appropriate systems, controls and expertise to undertake this type of lending. Also, scale is an important factor in determining whether a credit union can put these processes in place and offer mortgages as a viable business line. 

The Government recognises the important role of credit unions as a volunteer co-operative movement in this country and welcomes any initiatives that might enhance the business model while simultaneously ensuring the protection of members' savings.