Joe McHugh (Donegal, Fine Gael)
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280. To ask the Minister for Finance if he will consider setting up a body of appeal for the credit union movement; and if he will make a statement on the matter. [21729/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions.  Within his 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.

The Central Bank have informed me that a body of appeal is already in place for credit unions under Part VIIA of the Central Bank Act, 1942, which establishes and makes provision for the functions and operation of the Irish Financial Services Appeals Tribunal (IFSAT) to which certain Central Bank decisions can be appealed.

The Credit Union Act 1997 Act sets out a list of appealable decisions (under Section 52). This list was expanded following the Commission on Credit Unions’ recommendations in 2012. 

Areas of the 1997 Act where credit unions have a right to appeal include, among others, appeals against regulatory directions given by the Central Bank under Section 87(1) or 87(2) or against decisions to refuse approval for the provision of an additional service by a credit union under Section 49(3)(b).

The Central Bank have informed me that it engages in a transparent manner with individual credit unions in relation to regulatory decisions and provides an opportunity for the credit union to ask any  specific questions arising and/or to provide relevant additional information prior to finalisation.

Joe McHugh (Donegal, Fine Gael)
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281. To ask the Minister for Finance if the expansion will be explored of credit union choice to customers in view of recent high profile departures from the banking sector; and if he will make a statement on the matter. [21731/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government acknowledges the important work credit unions are doing to support communities throughout Ireland at this difficult time and recognises the key role that credit unions play in local communities across Ireland. The Minister of State in my Department, Sean Fleming TD, has credit unions as part of his remit. 

While recent high profile departures from the banking sector that the Deputy references are disappointing, they do present an opportunity for credit unions to grow. To that end, Minister Fleming met with both the Irish League of Credit Unions (ILCU) and the Credit Union Development Association (CUDA) in recent months to discuss their respective members' strategies as a result of the changing landscape.

There are a number of commitments set out in Programme for Government, including a review of the policy framework in which credit unions operate. As part of the review, the Department has held extensive engagement with the credit union representative bodies since September 2020 to seek feedback on their key priorities for the sector. In addition, the Department is taking into account work already completed by the Credit Union Advisory Committee (CUAC).

It is important to state that credit unions are co-operative financial institutions owned and controlled by their members. Each credit union has a common bond that establishes the basis for membership (e.g. members within a community or a workplace) and credit unions can offer services to members that are within their common bond.

In terms of the services /products that credit unions can and already do provide, the Deputy may be interested in the following:

Review of Lending and Investment Regulations

The Central Bank has in recent years completed reviews of both the lending and investment frameworks to ensure that credit unions operate under a framework that is both tailored and proportionate, to reflect the unique nature of the sector, and to provide flexibility for credit unions who have ambitions to grow. 

Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in SME and mortgage loans, with further additional lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As at December 2020, credit unions had a combined mortgage and SME loan book of circa €344 million, an increase of 12% year-on-year.  

The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including accounts in authorised credit institutions, certain bank and corporate bonds, sovereign bonds and investments in Tier 3 Approved Housing Bodies (AHBs) to provide social housing.

SME Lending

Nineteen credit unions, supported by ILCU, CUDA and Metamo, have been approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. With their local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. The further development of SME lending in a controlled manner could also have the additional benefit of assisting credit unions in growing and diversifying their loan book.

Access to Finance for Retrofit

The Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.

Investment in Approved Housing Bodies

Since 1 May 2018 it has been possible for credit unions to invest in Approved Housing Bodies through a regulated vehicle. I understand that a number projects are being progressed by the sector at present, which may lead to investment in AHBs.

Current Accounts

The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 51 credit unions, representing circa 50% of sector assets, currently have approval to provide Member Personal Current Account Service (MPCAS).