Clare Daly (Dublin North, United Left)
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232. To ask the Minister for Finance if he will postpone the signing of the remaining sections of the commencement order of the Credit Union and Co-operation with Overseas Regulators Act 2012, as requested by the Irish League of Credit Unions, to allow further discussions on regulation CP88, which will undermine the ability of credit unions to operate effectively. [32836/15]

Tom Fleming (Kerry South, Independent)
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245. To ask the Minister for Finance if he will intervene in the proposals by the Central Bank of Ireland for a savings limit of €100,000 per credit union member, as these limits will force the affected members to withdraw their savings and business from credit unions and place their funds on deposit with the main banks; and if he will make a statement on the matter. [33059/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 232 and 245 together.

The Credit Union and Co-operation with Overseas Regulators Act 2012 was signed into law by the President of Ireland on 19 December 2012. Following enactment, different parts of the 2012 Act have been commenced in tranches at different times. This approach was taken, as the Department is cognisant of the fact that credit unions needed time to implement all aspects of the 2012 Act and so has informed the timeline for implementation of the various measures on different dates.

I have not yet signed a commencement order for the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 which covers the following areas: reserves; liquidity; lending; investments; savings; borrowing; systems, controls and reporting arrangements; and services exempt from additional services requirements.

I have been informed by the Central Bank that the draft regulations set out in Consultation Paper 88 (CP88), will be introduced at end December 2015.  It is my intention to commence the remaining sections of the 2012 Act on 31 December 2015 in line with the introduction of the regulations.  These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the 1997 Act.

The introduction of the new sections into the 1997 Act by the 2012 Act will, in effect, remove some of the requirements (including limits) that currently exist in certain sections and will provide regulation making powers to the Central Bank. The new sections will also contain a number of new requirements. 

My role as Minister for Finance 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 at the Central Bank is the independent regulator for credit unions.  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.

While it is important to distinguish this division of roles, it is equally important to recognise that both the Registrar of Credit Unions and myself, as Minister for Finance are working together for the safety of members' savings and the security of the credit union sector.  

The regulations introduce a maximum individual member's savings limit of €100,000 which will ensure the protection of members' savings and continue to ensure that credit unions' funding is sufficiently diversified and is not dependent on a small number of members. 

Following consultation with the credit union sector and representative bodies, the Central Bank amended the transitional arrangement for the savings regulations to provide for credit unions that have individual member savings in excess of €100,000 at the commencement of the regulations to apply to the Central Bank to retain these savings where they can demonstrate that it is appropriate and prudent for them to do so.

As outlined in the Central Bank's feedback statement on CP88, as part of the consultation process I proposed that in the interests of clarity and fairness, credit unions are provided with details of the process of applying for a retention of savings above the limit amount.  I have been informed by the Registry of Credit Unions that all credit unions have been contacted giving further information on its application criteria for the retention of savings in excess of €100,000.  The Registry of Credit Unions intends to engage with the representative bodies and to invite comments from them prior to finalisation of the application process. When the application process is finalised, the Registry will provide an application form and explanatory notes in order to assist credit unions. It is anticipated that application forms will be available during December 2015.  It is envisaged that applications will be accepted in the first quarter of 2016 and that applicant credit unions will be informed by the end of the second quarter of 2016 on the outcome of the process, which is well within the 12 month transitional period. Where a credit union has demonstrated that it meets the criteria, it will be in a position to retain members' savings in excess of €100,000 held at the commencement of the regulations.

I welcome the steps that have been taken to provide clarity for credit unions on the criteria for the retention of savings over €100,000 and also welcome the proposed engagement with the representative bodies to seek their comments on the application process. 

The Central Bank has also informed me that it is committed to undertaking a review of the continued appropriateness of the savings limit, once the impact of the restructuring process can be assessed. It is envisaged that this review will commence within three years of the introduction of the regulations. The Central Bank has agreed to provide regular updates to my Department on developments in this matter.  

The Central Bank has further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate business development can be facilitated within the regulatory framework. As set out in the feedback statement on CP88, the Central Bank intends to invite interested parties to discuss business model development in the coming months.

The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to support a strengthened and growing credit union movement.