Tommy Broughan (Dublin North East, Independent)
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172. To ask the Minister for Finance if he will defer regulation Consultation Paper 88 for credit unions; and if he will make a statement on the matter. [39013/15]

Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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187. To ask the Minister for Finance if he will address the concerns of a credit union (details supplied) in County Westmeath regarding the planned Consultation Paper 88 regulations which it believes will seriously damage credit unions, restrict their ability to provide services to their members, and restrict their ability to compete with other financial institutions; and if he will make a statement on the matter. [39389/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 172 and 187 together.

The Government recognises the distinct and important role that credit unions play in Irish society and the financial sector and is committed, with the Central Bank, to achieving our vision of financially strong, well governed credit unions providing services to current and future members.

Commencement of all sections of the Credit union and Co-operation with Overseas Regulators Act 2012 (2012 Act) has been aligned with the credit union financial year and the introduction of the underpinning Central Bank regulations, with a view to implementation of the 2012 Act in a coherent and cohesive manner. The publication of the regulations marks another important step in the development of a strengthened regulatory framework for credit unions. It is considered that the commencement of the remaining sections of the 2012 Act and implementation of  these regulations, combined with and the prudential and governance requirements already in place, provide an appropriate regulatory framework for the credit union sector at this time.

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. I have asked the Registrar of Credit Unions to consider the views of the credit union movement as regards the draft regulations and their implementation and report back to me before I 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  Credit Union Act 1997.

The provision of regulation making powers to the Central Bank on commencement of the remaining sections of the 2012 Act provides flexibility where the Central Bank can, in the future, review and update the regulations as appropriate on a timely basis following consultation. The Central Bank is keen to ensure that the regulations remain appropriate for the credit union sector and in the future, where credit unions set out a clear path on how they wish to develop, the Central Bank will consider any amendments to the regulations that may be appropriate.

The need for credit unions to grow income has been recognised as a requirement for sector viability. While developing new products and services is a necessary element of this, the Central Bank has highlighted the importance of credit unions ensuring that they are in a position to grow their income from their traditional lending business. It is also recognised that there is a level of change in the sector arising from the voluntary restructuring programme.

The Central Bank has informed me that since 2010 it has received less than 10 applications for approval of additional services under sections 48 to 52 of the Credit Union Act 1997. These applications have all been received in recent months and are currently at a various stages of the approval process. The e Central Bank further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In supporting the sustainable and prudent development of the sector, the Central Bank is working to ensure that proposed changes to the business model are prudently structured and implemented. To that effect the Central Bank has invited a number of interested parties in the credit union sector to participate in focused dialogue in November 2015 with a view to gaining a better understanding of how credit unions want to develop their business model and to identify changes that may be required to the regulatory framework to facilitate prudent development.

I am aware of the concerns highlighted by the credit union sector in relation to the cap on savings of €100,000 and I have requested that the Central Bank provides a clear process for credit unions to follow regarding the application process. I am satisfied that the Central Bank is developing a clear application process with detailed information being made available before end 2015.

Regarding lending restrictions placed on certain credit unions by the Central Bank,  the  Registrar of Credit Unions announced a review of lending restrictions in February 2015 with a closing date for applications of 30 September 2015. The Central Bank has informed me that 59% of applications received have been reviewed. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board s stated credit risk appetite. As of this week c. 40% of credit unions are now subject to a lending restriction. 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 continue to support a strengthened and growing credit union movement.