The Minister for Finance, Mr Michael Noonan, TD, today welcomed the enactment of legislation to implement the Commission on Credit Unions Report and provide for major reforms in the credit union sector.
The Credit Union and Co-operation with Overseas Regulators Act 2012 has been signed in to law and several of its key provisions are commencing immediately.
The Act implements over 60 of the recommendations of the Commission on Credit Unions across a range of areas, including:
Prudential Regulation – including reserves, liquidity, lending and investments.
Governance – including the role of the Board, Chair and the Manager.
Restructuring – providing for a process of amalgamations and transfers to be undertaken on a voluntary, incentivised and time-bound basis and overseen by the Restructuring Board or ‘ReBo’.
Stabilisation – providing financial support to viable but undercapitalised credit unions.
The early enactment of the Bill clears the way for €250m to be contributed by the Government to the Credit Union Fund created under the legislation. This funding will support the restructuring process and underpin the stability of the credit union sector.
A number of changes were made to the Bill during its passage through the Oireachtas to address issued raised during the course of a very constructive debate. These include
The term limits for directors have been changed from 9 years in aggregate in any 15 year period, to 12 years in aggregate in any 15 year period.
Clarification on the application of wider financial services legislation to credit unions.
Changes to the exclusions from Board membership, for example, to allow family members of volunteers to become directors.
Speaking today the Minister said:
“This is the first major overhaul of credit union legislation in 15 years. It is the product of extensive engagement with the credit union movement through the Commission on Credit Unions Report. The Bill was the subject of extensive and constructive debate during its passage through both Houses and the enacted legislation has been enhanced and improved by the parliamentary process.
The Act paves the way for the €250m contribution to the Credit Union Fund by the taxpayer before the end of the year. This is a key investment in the future of the credit union movement in this country and it is important that all concerned now engage with the new reforms to ensure their success.”
A number of provisions of the Bill are being commenced immediately related to restructuring, stabilisation and Central Bank co-operation with overseas regulators.
The title of the Bill was changed to reflect changes being made to Central Bank legislation under the Bill, which are unrelated to the Bill as published. These changes will allow for improved co-operation between the Central Bank and its equivalents in other jurisdictions.
The Minister highlighted the importance of these provisions:
“The Bill also allows for greater co-operation between the Central Bank and regulators in other jurisdictions. This underlines Ireland’s commitment to remaining at the forefront of international co-operation in the financial services area and the application of international best practice at home and abroad.”
ENDS
Note for editors
What is commencing immediately?
The Minister for Finance, Mr. Michael Noonan, TD, has signed an Order commencing certain sections of the Credit Union and Co-operation with Overseas Regulators Act 2012. The sections which are commenced are:
(a) sections 1 to 3 and 5;
(b) section 35;
(c) Parts 3 to 5;
(d) Schedule 1 in so far as it relates to items 59 and 81;
(e) Part 1 of Schedule 2 (other than in so far as it relates to the repeal of section 9(3), of the Investment Intermediaries Act 1995 (No. 11 of 1995), mentioned in column (4) opposite the mention of item 6 in column (1));
(f) Part 2 of Schedule 2 (other than in so far as it relates to the revocation of Regulation 163 and paragraphs (1), (2) and (5) to (10) of Regulation 165, of the European Communities (Markets in Financial Instruments) Regulations 2007 (No. 60 of 2007), mentioned in column (4) opposite the mention of item 3 in column (1));
(g) Schedules 3, 4 and 5.
This commencement order relates to restructuring and stabilisation of credit unions and allows the Credit Union Fund and the Credit Union Restructuring Board to be established on a statutory basis. Once the Credit Union Fund has been established, €250m will be placed in the Fund by the Minister to facilitate the restructuring of the credit union sector.
The Order also commences Part 5 of the Act and certain parts of Schedules 2 to 5 of the Act which will facilitate co-operation between the Central Bank of Ireland and other overseas regulators. Enacting these provisions prior to the end of 2012 allows the Central Bank to become a full signatory to the Multi-lateral Memorandum of Understanding of the International Organisation of Securities Commissions (IOSCO).