Michael McGrath (Cork South Central, Fianna Fail)
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117. To ask the Minister for Finance if he will set out specifically the initiatives which have been undertaken by the Central Bank of Ireland that will ensure development and growth of the credit union sector in recent times in view of the Registrar of Credit Unions remit to maintain the financial stability and wellbeing of credit unions; and if he will make a statement on the matter. [23878/16]

Michael Noonan (Limerick City, Fine Gael)
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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 the Minister for Finance work together for the safety of members' savings and the security of the credit union sector.

The Registrar recognises the strategic challenges facing the sector, the need to revitalise business models and find ways of doing business to better serve members, delivering on their expectations. The Registrar is committed to engaging with credit unions on their business model development proposals. As part of that engagement process, the Central Bank established Sector Stakeholder Dialogues in November 2015 to facilitate engagement with credit unions. This is with a view to gaining a better understanding of how credit unions want to develop their business model and to identify any changes that may be required to the regulatory framework to facilitate prudent development. Since the establishment of the Sector Stakeholder Dialogues five meetings have taken place.

To date the focus of the group has been on a number of areas including:

- Longer term lending;

- Additional services framework; and

- Publication of sectoral data.

The group has identified co-ordinators for each of the areas and work is progressing. In the area of lending, the group is discussing objectives for credit unions in relation to longer term lending and the potential impact of current longer term lending limits. As a first step to making the longer term lending limits more usable, the Registrar has proposed to undertake work on potential changes to the conditions attaching to approvals for existing longer term lending limits, which were originally developed in 2007. Some initial proposals on how the conditions could be amended have been put forward for discussion within the group. Members of the group have undertaken to carry out some analysis on the impact of such proposals on individual credit unions and report back to the group.

In relation to additional services, the development of guidance on the application process for additional services is under consideration with a view to developing and publishing guidance material for credit unions. In relation to sectoral data, the group is considering the type and format of data that could be published on a regular basis by the Registrar.

The dialogues will continue over the coming months with the next meeting scheduled to take place before the end of July.

Furthermore, Regulations made by the Central Bank of Ireland (the Central Bank); the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, which were commenced on 1 January 2016, make specific reference to section 43 of the Act and to the further classes of investments in which a credit union may invest its funds which may include investments in projects of a public nature. The Regulations provide that investments in projects of a public nature include, but are not limited to, investments in social housing projects.

In addition to these measures, the Credit Union Advisory Committee (CUAC) made a number of recommendations in its recent report presented to me on 29 June 2016.  It is expected that these recommendations when implemented will support credit unions in developing their business models, particularly recommendations around tiered regulation and the review of Section 35. I will be establishing an Implementation Group to facilitate and oversee implementation of CUACs recommendations.