Brendan Smith (Cavan-Monaghan, Fianna Fail)
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66. To ask the Minister for Finance how he is working to position credit unions as community-centric financial institutions integral to their local communities, small businesses and farmers; and if he will make a statement on the matter. [16083/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government acknowledges credit unions as community centric financial institutions integral to their local communities, small businesses and farmers. This Government has a dedicated Minister for Financial Services, Credit Unions and Insurance, Minister Robert Troy T.D.

The Government has a multi strand approach to help support the development of the credit union sector.

The Retail Banking Review published in November 2022 outlined that credit unions could play a greater role in the provision of retail banking products and services in the coming years.

My officials, together with credit union stakeholders worked collaboratively to deliver the Credit Union (Amendment) Act 2023. The Act represents a very significant piece of legislation that will have far-reaching positive implications for the credit union sector in the years to come.

The 2023 Act increased flexibility around the common bond, opening up opportunities to expand membership and services with options such as referrals and loan participations. It will also allow for corporate credit unions to be formed. These are credit unions whose members are other credit unions. The majority of provisions of the 2023 Act have commenced. Provisions yet to be commenced are in relation to Credit Union Service Organisations (CUSOs) and the corporate credit union.

To support the sector my predecessor, Minister McGrath requested that the Credit Union Advisory Committee (CUAC) review implementation of the 2023 Act. CUAC will assess progress in implementation, gather data on activity under select areas and highlight any barriers or challenges to utilising the 2023 Act. CUAC have completed their first report and I am currently considering its findings.

The 2023 Act will help the sector, but as outlined in Retail Banking Review, credit unions must develop their strategy and increase collaboration to reach their potential.

The Government received a significant level of feedback on the Central Bank of Ireland’s Lending Regulations and its impact on the credit union sector. I would like to highlight the work that previous Ministers of State did in communicating the sector’s concerns to the Central Bank of Ireland. The Central Bank of Ireland have listened to these concerns and I welcome the proposed changes published under Consultation Paper 159 - Consultation on Proposed Changes to the Credit Union Lending Regulations. The proposed amendments will enable credit unions to provide more house lending and business loans to its members.

The “It Makes Sense” loan is a small credit union loan available to people on low incomes. Credit union members can repay the loan through the Household Budget Scheme if they get their social welfare payment at a post office. The Household Budget Scheme is a scheme that helps people getting certain social welfare payments to spread the cost of some household bills over the year. My thanks to Minister Calleary and his predecessor in the Department of Social Welfare for supporting this initiative and funding credit unions for the cost of providing this service.

The Credit Institutions Resolution Fund was established under the Central Bank and Credit Institutions (Resolution) Act 2011 to support resolution actions in the State. This fund is managed and administered by the Central Bank of Ireland. The levy rate for credit unions for the Credit Union Institutions Resolution Fund for 2025 was set at 0%. This was decided on the basis that the target size of €65 million for the fund would be met in 2025 with further income interest earned.

The stabilisation support scheme for credit unions was a recommendation of the 2012 Report of the Commission on Credit Unions. The purpose of the Stabilisation Scheme is to have funds available, if needed, to assist credit unions whose reserves have temporarily fallen below the 10% minimum statutory reserve requirement but are otherwise considered by the Central Bank to be potentially viable.

The Department of Finance prepares the annual Levy Regulations following consultation with the Central Bank and the Credit Union Advisory Committee. These regulations come into force on 30 September each year and prescribe the rate of contribution or method of calculating the rate of contribution to the Resolution Fund.

In September 2023, my predecessor, Minister McGrath requested that the Department complete a comprehensive review of both the Credit Union Resolution and Stabilisation funds. A consultation paper was issued to the sector in July 2024 with a closing date for submissions of 27 September 2024. The feedback from this consultation process is being considered by the Department as part of its overall review of the funds. This will inform the future structure and use of the Funds.

My Department convenes and chairs on a quarterly basis a meeting of departmental officials, the Central Bank of Ireland and the Representative and Associate bodies, ILCU, CUDA, CUMA and the NSF. This provides a forum to discuss credit union issues and the development of the credit union sector.

As outlined in the Programme for Government, this Government will support the sector in developing a strategy to ensure credit unions can fully leverage new opportunities. However, this will require leadership and significant collaboration in the sector. This is highlighted Retail Banking Review which states that “...the credit union sector and its leadership should develop a strategic plan to deliver business model changes that would enable the sector to safely and sustainably provide a universal product offering to all credit union members.”

Minister Troy is currently considering the most appropriate path forward to deliver an effective strategy for the sector.