Written answers

Thursday, 21 July 2016

Department of Finance

Credit Union Services

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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120. To ask the Minister for Finance the additional services most frequently requested by credit unions; the number of inquiries which relate to an application for provision of debit card services; and the number of applications for debit cards which have been approved in the past five years. [23881/16]

Photo of Michael NoonanMichael 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.

The Credit Union Act, 1997 (the 1997 Act) and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (which set out services exempt from additional services regulations) set out the services that a credit union may provide to its members. These include loans; savings; account access by phone; account access by internet; third party payments (including EFT); ATM services; bureau de change; certain insurance services on an agency basis; group health insurance; bill payment; money transfers; standing orders; direct debits; financial counselling; PRSAs on an introduction basis and insurance on an introduction basis. Where a credit union wishes to provide services to its members, other than those services that are provided for under the 1997 Act, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48-51 of the 1997 Act.As set out in communications to the sector the Central Bank is, in principle, supportive of credit unions developing additional services. The Central Bank will consider proposals from credit unions on new additional services they wish to provide to members where the credit union can demonstrate that: the proposed additional service is supported by a robust business case; the proposed additional service is not contrary to financial services legislation; the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and· systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated. As set out above credit unions can apply to the Central Bank for approval to provide such additional services in line with sections 48-51 of the 1997 Act. Credit unions wishing to provide debit cards should engage with the Registrar of Credit Unions to discuss their proposals. I have been informed that the Central Bank has been clear in its recent engagement with credit unions and other stakeholders who are seeking to offer debit cards that this service must be supported by the appropriate payment account service. Consequently, the Central Bank has recently worked with a group of credit unions on the development of full payment account services which will result in an approved additional service, including a payment account broadly analogous to a bank personal current account which appropriately supports payment instruments such as debit cards. This service is subject to application and formal approval by the Registrar of credit unions as an additional service.

The most frequently applied for services are insurance services on an introduction basis and provision of full service payment accounts. Since 1 January Insurance Services on an introduction basis have been included as a service exempt from additional services requirements under Part 9 of Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. The Central Bank has further informed me that while no credit union has been approved to provide debit cards over the past five years, it is currently progressing a number of applications for a full service payment account which would support payment instruments such as debit cards.

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