The government has published a bill that aims to grow credit union lending through a wider range of available services.
The Credit Union (Amendment) Bill is the first substantive legislation relating to credit unions to be introduced in the past decade and comes following a review of the policy framework within which credit unions operated.
The review focused on the role of credit unions and ways to improve member services, and support enhanced governance and investment in collaboration, and non-legislative methods of improving transparency of regulatory engagement.
The government said the bill would support investment in collaboration through the creation of corporate credit unions as an additional regulated vehicle through which credit unions could collaborate, with credit unions allowed to invest in ventures supporting credit unions.
It aims to improve member services by allowing credit unions to refer members to other credit unions and to participate in loans of other credit unions.
In Association with
The bill would allow the Minister for Finance to set a maximum interest rate, currently fixed at 1% per month, to provide more flexibility for credit unions to price risk in a rising interest rate environment.
Amendments to facilitate greater focus on strategic planning and to redress the balance of responsibility on the board between directors and management have also been written into the bill.
The provisions made in the amendments include the option of making the manager a board member, reducing the minimum number of board meetings to six per year, reducing the frequency of policy reviews, and reducing the number of administrative issues to be mandatorily approved by the board.
The review also produced three non-legislative policy actions. Firstly, the Central Bank, the Credit Union Advisory Committee and the Minister for Finance will enter into a memorandum of understanding to improve coordination on policy matters, while respecting regulatory independence.
Secondly, the Central Bank has agreed to introduce an enhanced engagement protocol with credit unions. Thirdly, the government has amended the terms of reference of a stakeholder group, chaired by the Department of Finance, to widen attendance and enhance transparency with the sector.
More than 100 proposals, including some from sector representatives, for legislative and regulatory changes were considered in the design of the bill. Minister of State with responsibility for Financial Services Seán Fleming said the government wants to pass the bill as soon as possible.
"The government wants credit unions to develop a wider range of products, with greater accessibility. This legislation will enable greater collaboration through the ability to establish corporate credit union," he said.
"It will enable wider availability of products across the movement through changes to the common bond. It will give credit union boards a greater focus on strategic issues, through practical governance changes.”
“A strong, resilient and collaborative credit union movement can take advantage of the opportunity afforded by banks withdrawing from Ireland and from branch closures. This legislation will help the credit union movement to grow as a key provider of community banking in the country.”
(Pic: Sam Boal/Photocall Ireland)
