Michael McGrath (Cork South Central, Fianna Fail)
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84. To ask the Minister for Finance the number of credit unions currently operating under lending restrictions; the number of credit unions with restrictions on lending to persons and aggregate monthly lending in bands of €10,000, in tabular form; and if he will make a statement on the matter. [2355/17]

Michael McGrath (Cork South Central, Fianna Fail)
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87. To ask the Minister for Finance the current restrictions that apply to long-term lending such as mortgages by credit unions; and if there are any plans to ease these restrictions. [2358/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 84 and 87 together.

I have been informed that in February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions subject to a lending restriction that are satisfied they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, could apply for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015.  The individual credit union lending restrictions in place are reviewed on a regular basis to determine whether they are still set at appropriate levels.

I have been informed by the Central Bank that circa 24% of credit unions (73 in total) are currently operating under lending restrictions compared with 52% at the start of the review process.  These include 8 credit unions with a monthly maximum lending restriction and 65 with a maximum individual loan size restriction.  In the majority of the relevant cases, the maximum individual loan size is in excess of €10,000 as detailed in the following table.

The Credit Union Act, 1997 (the 1997 Act) and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) (which set out services exempt from additional services requirements) set out the services that a credit union may provide to its members.

Credit unions are not prohibited from providing mortgages to members. However, mortgages are subject to the maturity limits contained in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (the Regulations) which set out the percentage of a credit union's loan book that can be outstanding for periods exceeding both 5 years and 10 years, as well as limits on the maximum outstanding liability to an individual member. Under the Regulations, issued at the beginning of January 2016, credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions are able to apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years).  Approval is subject to conditions set by the Central Bank.

As a first step to making the existing longer term lending limits more usable the Central Bank agreed to undertake work on potential changes to the conditions attaching to approvals for existing longer term lending limits as part of the sector stakeholder dialogue process. Some initial proposals on how the conditions could be amended were put forward by the Central Bank for discussion within the sector stakeholder dialogue and the Central Bank now intends to publish revised conditions.

The September 2016 Prudential Return indicates that for the sector overall total gross loans over 10 years amount to 2.46% of total loans in the credit union sector compared to the limit of 10%. 73% of credit unions currently engaged in lending over 10 years have less than 3% of their total gross loans outstanding for over 10 years, and just 11% have more than 5% of their total gross loans outstanding for over 10 years.

Lending restrictions in credit unions are a matter for the Registrar of Credit Unions at the Central Bank, who, as the independent regulator for credit unions, acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.

Michael McGrath (Cork South Central, Fianna Fail)
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85. To ask the Minister for Finance the number of credit unions that have been approved for additional services, declined for additional services and the number of applications in the past five years ongoing; and the length of time it takes on average from preliminary application stage to full approval. [2356/17]

Michael McGrath (Cork South Central, Fianna Fail)
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86. To ask the Minister for Finance the additional services that are most frequently requested by credit unions; the number of inquiries that relate to an application for provision of debit card services; and the number of applications for debit cards that have been approved in the past five years. [2357/17]

Michael McGrath (Cork South Central, Fianna Fail)
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88. To ask the Minister for Finance the number of credit unions that have a current account and debit card service available for their customers. [2359/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 85, 86 and 88 together.

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 and 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.

I have been informed by the Central Bank that in the last five years, 11 applications for additional services have been approved, no application has been declined and there are currently no such applications in progress.  The majority of these applications have related to the provision of a Member Personal Current Account Service. I have been further informed by the Central Bank that the timescale from preliminary application stage to full approval depends on the quality of information provided. Where the application form has been fully completed and contains or includes all of the information requested, the Central Bank endeavours to turn around the application as quickly as possible. 

In respect of debit cards, the Central Bank has been clear in its engagement with credit unions and other stakeholders who are seeking to offer this service, that it must be supported by the appropriate payment account service. The Central Bank has recently approved a suite of additional services known as a Member Personal Current Account Service (MPCAS) for 6 applicant credit unions under the Additional Services Framework set out in sections 48-52 of the 1997 Act. The approved MPCAS service provides for credit unions to offer debit cards, overdrafts and a full range of payment services within an appropriate risk framework. This represents an example of an additional service that has been approved by the Central Bank and it is open to credit unions to apply for similar approval for this service (this does not preclude a credit union from making an application for approval of any other additional service in accordance with sections 48-52 of the 1997 Act). The Central Bank has published details of MPCAS on its website along with the approval process, details of the application requirements and related guidance.