Written answers

Wednesday, 18 November 2015

Department of Finance

Credit Unions Regulation

Photo of Paul MurphyPaul Murphy (Dublin South West, Socialist Party)
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37. To ask the Minister for Finance if consideration has been given to a deferral of the implementation of the Consultation Paper 88 reforms in Credit Unions, given the concerns expressed by the credit union movement; and if he will make a statement on the matter. [40384/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Credit Union and Co-operation with Overseas Regulators Act 2012 (the "2012 Act" ) was signed into law by the President in December 2012.

It was agreed at that time that it would be neither practical nor feasible to commence the 2012 Act in its entirety in one fell swoop. Following on from that, an implementation timetable for the 2012 Act was devised in consultation with stakeholders, including credit union representative bodies.

Commencement of all sections of the 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. This has provided credit unions with the time necessary to ensure that the required processes and procedures are in place prior to implementation of each tranche.

I have met with the three credit union representative bodies and the perceived impact of the new regulations was discussed. 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 by the Registrar of Credit Unions.  These sections of the 2012 Act, when commenced will replace, amend or supplement existing sections of the 1997 Act.

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 of €100,000.  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 Central Bank 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. My officials have asked the Central Bank to consider accelerating this review and this is under consideration by the Central Bank. 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 has contacted all credit unions inviting them to attend upcoming information seminars being held around the country from 17 to 30 November. These seminars will provide credit unions with the opportunity to engage with the Central Bank  on the new regulations and to discuss development of the credit union business model, including any changes to the regulatory framework that might be required to facilitate those developments. 

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

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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38. To ask the Minister for Finance his plans to engage with the credit union movement before the commencement of the remaining element of the 2012 Credit Union and Co-operation with Overseers Regulators Act. [40340/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Government recognises the distinct and important role that credit unions play in Irish society and in the financial sector and it is committed, with the Central Bank, to achieving our vision of financially strong, well governed credit unions providing appropriate services to current and to future members.

I have met with the three main credit union representative bodies and have discussed with them their issues of concern surrounding the  perceived impact of implementing the regulations.  While I am very aware of  concerns raised by the credit union sector in relation to the proposed regulations, the implementation of regulations is a matter for the Registrar of Credit Unions at the Central Bank, in her role as independent regulator for credit unions. However, 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 come back to me before I commence the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 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.

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