Willie Penrose (Longford-Westmeath, Labour)
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55. To ask the Minister for Finance his plans to amend the Credit Union and Co-operation with Overseas Regulation Act 2012 to allow the credit unions lend to affordable housing bodies and local authorities; and if he will make a statement on the matter. [9092/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Credit Union and Co-Operation with Overseas Regulators Act 2012 introduced changes to the Credit Union Act, 1997 (the 1997 Act). Since 1 January 2016, section 43 of the 1997 Act provides that the Central Bank may prescribe investments in which a credit union may invest its funds.

Following engagement with the credit union sector on proposals for credit unions to provide funding for the provision of social housing, the Central Bank undertook a review of the investment framework for credit unions in 2017. This review resulted in the publication of Consultation Paper 109 (CP109) which consulted on potential changes to the investment framework for credit unions. One of the proposals in CP109 was that credit unions be permitted to provide funding for the provision of social housing to Tier 3 Approved Housing Bodies (AHBs).

Submissions to CP109 were broadly supportive of credit unions providing funding to Tier 3 AHBs with a significant number of those in favour citing the alignment of the social goals of both the credit union movement and the AHB sector as the principal rationale for permitting this type of investment.

Taking account of the feedback provided to CP109, on 1 February 2018 the Central Bank outlined that it intends to proceed with the addition of investment in Tier 3 AHBs as a permitted investment class for credit unions. Regulations giving effect to this change, will be commenced on 1 March 2018. From this date, credit unions will be permitted to provide funding to Tier 3 AHBs for the provision of social housing. The maximum permitted investment amount per credit union is 50% of regulatory reserves where a credit union has total assets of at least €100 million and 25% of regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of close to €700 million.

The Central Bank is open to considering further investment proposals. As was the case with proposals around credit unions investing in social housing, where the Central Bank receives detailed proposals which can demonstrate that an investment could fall within the appropriate risk profile for credit union investments, it will consider further amendments to the investment regulations to facilitate such investments in the future.

The Central Bank has committed to undertaking and publishing analysis of credit union sector investments, two years post commencement of the amending investment regulations for credit unions, to assess and analyse the actual impact which the changes to the investment regulations have had.