Michael Healy-Rae (Kerry, Independent)
Link to this: Individually | In context | Oireachtas source

64. To ask the Minister for Finance his views on a matter (details supplied) regarding Central Bank rules when dealing with credit unions; and if he will make a statement on the matter. [22467/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

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 myself, as Minister for Finance, are working together for the safety of members' savings and the security of the credit union sector.

The Central Bank informed me that they are prevented by legislation from discussing individual regulated firms and are therefore not in a position to discuss details about their supervisory engagement with individual credit unions.

However, the Central Bank has informed me that adequate reserves support a credit union’s operations, provide a base for future growth and protect against the risk of unforeseen losses. Credit unions need to maintain sufficient reserves to ensure continuity and to protect members’ savings. The regulatory reserve requirement (capital requirement) for credit unions is the amount required to be held in the regulatory reserve of a credit union, expressed as a percentage of the assets of a credit union. All credit unions are required to maintain a minimum regulatory reserve of at least 10% of the assets of the credit union.  Credit union reserves comprise retained earnings from current and previous years, which limits their ability to raise reserves as they do not have the ability to raise capital through other means. Reserves available to a credit union for the purposes of the Regulatory Reserve Requirement must be realised, unrestricted and non-distributable to ensure they are capable of absorbing losses.

The Report of the Commission on Credit Unions, published in April 2012, sets out detailed governance standards for credit unions. The majority of these governance standards were reflected in the Credit Union and Co-operation with Overseas Regulators Act 2012 which provides a legislative framework to improve governance standards in credit unions with a particular focus on those who exercise significant influence and control in a credit union i.e. board of directors and the management team. The Commission on Credit Unions also made recommendations in relation to the introduction of fitness and probity for credit unions. In 2013, a tailored version of the Fitness and Probity regime applying to all other regulated financial service providers was introduced for credit unions and is now fully implemented.

Credit union members should have confidence that those individuals holding senior positions in credit unions can demonstrate that they are competent and capable, act honestly, ethically and with integrity and are financially sound. Under the Fitness and Probity regime for credit unions an individual is required to have and to demonstrate the competence necessary to perform specified functions. This is normally tested with regard to the relevant experience of the individual and/or relevant qualifications.

I am satisfied that in the performance of her regulatory and supervisory functions, the Registrar of Credit Unions is working in the best interests of individual credit unions, their members and the sector as a whole. 

This Government recognises the important role of credit unions as a volunteer co-operative movement in Ireland and the Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to continue to support a strengthened and growing credit union movement.