Róisín Shortall (Dublin North West, Social Democrats)
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134. To ask the Minister for Finance the rationale for the 2015 decision to restrict credit unions from holding over €100,000 in savings on behalf of members; if he is satisfied that this requirement does not violate competition law in the banking sector; and if he will make a statement on the matter. [17053/17]

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.

Credit unions are regulated and supervised by the Registrar of Credit Unions at the Central Bank who 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 I, as Minister for Finance, are working together for the safety of members' savings and the security of the credit union sector.

The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (the Regulations) came into effect on 1 January 2016 following commencement of the remaining sections of the Credit Unions and Co-operation with Overseas Regulators Act 2012 which provided regulation making powers to the Central Bank. These Regulations set out an individual member savings limit of €100,000. The Regulations introduced on 1 January 2016 also provided that credit unions could apply to the Central Bank to retain individual members' savings in excess of €100,000, which were held at commencement of the Regulations and that Credit unions with total assets in excess of €100m could apply to the Central Bank for approval to increase individual member savings in excess of €100,000.

The Central Bank have informed me that it is their duty to ensure that actions taken represent the best overall outcome, from the perspective of ensuring the protection of members' funds by credit unions and safeguarding the stability of the sector. A maximum individual member's savings limit of €100,000 ensures the protection of members' savings and continue to ensure that credit unions' funding is sufficiently diversified and is not dependent on a small number of members. This cap is based on the savings amount protected under the Deposit Guarantee Scheme and would therefore ensure that no member of a credit union would lose any of their savings in the event of a resolution. It is aimed at protecting members' savings and also at protecting the financial stability of the sector, given the wider potential negative impact on the sector of any credit union member losing some of their savings.

The Central Bank have further informed me that in relation to concerns raised regarding competition, they have been provided with specific regulation making powers by the Oireachtas in relation to credit unions. Where the Central Bank regulates one category of regulated entity by imposing specific regulatory requirements which may be different to those imposed on other categories of regulated entities, this simply reflects the nature of the distinct categories of entities involved. As in other areas of the regulatory framework, this limit takes account of the nature, scale and complexity of credit unions and is considered appropriate by the Central Bank at this time given the current credit union business model. 

The Competition and Consumer Protection Commission (CCPC) has responsibility for enforcing Irish and EU competition law. More information on their role in this regard is available on their website, www.ccpc.ie.