Written answers

Wednesday, 9 November 2022

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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31. To ask the Minister for Finance if, as part of the retail banking review currently under way by his Department, consideration is being given to reducing the 10% reserve requirement for credit unions, which are now operating current accounts and banking services as a result of the large amount of new customers that they are receiving, due to the exit of banks (details supplied) from Ireland; if his attention has been drawn to the significant difficulties that this 10% requirement is now having for new customers of credit unions who have chosen them as their new banking service given the limits on the amounts of funds allowable; and if he will make a statement on the matter. [55737/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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On 23 November last, I published the Terms of Reference for a broad-ranging review of the retail banking sector in Ireland. The Review is being conducted by officials in my Department with assistance from other Government agencies and Departments. At the time of publishing the Terms of Reference, it was confirmed that the Review team would report to me in November 2022.

Although the Credit Union sector were not specifically mentioned in the Terms of Reference, part of the Review will be to consider the level of competition in the retail banking sector and ways to improve it, including the role the Credit Union could play in this regard.

It is important that I highlight that it is the role of the Central Bank, as the independent regulator, to set the minimum regulatory reserve requirement for credit unions. In setting the minimum regulatory reserve requirement, the Central Bank are mindful of the financial resilience of the sector, members confidence and the protection of members' funds. Given the current reserves position of credit unions, the level of the minimum regulatory reserve requirement does not represent an impediment to growth in credit union lending.

On the Review process itself, stakeholders, including members of the public, were invited to make submissions to the Department on issues that fall within the Terms of Reference. These submissions were by way of a public consultation which was launched at the Retail Banking Review dialogue in Tullamore on 16th May. The dialogue was attended by over 100 delegates representing a wide range of organisations, including the retail banks, non-banks, fintech, trade unions, government agencies and departments, the Central Bank, Credit Unions, An Post, the legal and accountancy professions, and the community and voluntary sector. This dialogue provided delegates with a forum to participate in an open and inclusive exchange again on the Terms of Reference. The public consultation process, which concluded on 8 July, received 102 responses.

Another important component of the Review was the consumer-focused survey of a representative sample of 1,500 consumers which was completed by Behaviour and Attitudes on behalf of the Department. The purpose of this survey was to ascertain consumers’ experience and perceptions of the banking sector in Ireland. The consumer survey report was published on 16 May 2022.

The Department also commissioned a comparison of international markets, through a competitive tender process. The international comparison was completed by Deloitte which included the collection of data for seven markets with similar characteristics to Ireland.

Currently the Review team are well advanced in drafting their report, which includes consideration of the information received through the various forms of engagement outlined above, and is in line to report to me in the coming weeks. On receipt of the report, I will take the recommendations arising from the review to Government for approval after which the report will be published.

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