Tuesday, 11 June 2019
Department of Finance
As the Deputy may be aware, the Credit Union Act 1997 has already been subject to significant amendment.
The Commission on Credit Unions was established on 31 May 2011 to review the future of the movement and make recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members’ savings and financial stability.
Following a detailed review by the Commission of Credit Unions the Credit Union and Co-Operation with Overseas Regulators Act 2012 (CUCOR Act) implemented a wide range of amendments to the Credit Union Act 1997 which were in the main introduced in legislation in 2012/2013 and in subsequent regulations issued by the Central Bank.
The CUCOR Act provided for the delegation of regulation making power to the Central Bank in respect of specific matters, including: savings; borrowing; lending; investments; reserves; liquidity; systems, controls and reporting arrangements; and additional services. These regulations were introduced on 1 January 2016 following a detailed consultation process with the sector (Central Bank Consultation Paper 88). The Investment Regulations have since been amended with effect from 1 March 2018 following public consultation (Consultation Paper 109) and revised Lending Regulations will be introduced later this year following a consultation process which closed in February this year (Consultation Paper 125).
The Deputy may also be interested to note that, following a policy paper it published in December 2017, the Credit Union Advisory Committee (CUAC) proposed that credit unions should be permitted to charge an interest rate on loans greater than the present ceiling of 1% per month. The CUAC recommendation proposed that this ceiling be raised to 2% per month. This amendment would provide credit unions with greater flexibility to risk price loan products and in so doing may create an opportunity for new product offerings. This recommendation from the CUAC followed a survey of the credit union sector which received responses from 117 credit unions.
The CUAC Implementation Group considered this proposal and agreed in principle to recommend that the Minister raise the interest rate ceiling to 2% per month, and for flexibility to be introduced to allow the interest rate to be amended in future by Statutory Instrument following consultation with the Central Bank and CUAC. This proposal will be considered by Government shortly.