Press release
Minister Fleming welcomes passage through the Seanad of the Credit Union Amendment Bill 2022
Published on
Last updated on
Published on
Last updated on
The Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Sean Fleming, has welcomed the swift passage of the Credit Union Amendment Bill 2022, allowing it to now progress through the Dáil.
The Minister thanked his colleagues in the Seanad for their very constructive approach to progressing the legislation which, when enacted, will enable credit unions to collaborate more effectively and develop a wider range of products.
The Bill will:
o The option of making the manager a member of the board;
o Reduce the minimum number of board meetings to six per annum;
o Reduce the frequency of review of policies; and
o Reduce the number of administrative issues to be mandatorily approved by the board
Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming, said:
“This is a really important piece of legislation, which will help credit unions grow to meet the changing banking landscape in the country.
“I want to thank my colleagues in the Seanad and all credit unions for their constructive approach to the legislation. It is the first meaningful reform for the credit union sector in ten years and will help them to do more for their members.
“I look forward to engaging with Members of Dáil Éireann in finalising this legislation, which will strengthen and help the credit union sector.”
The legislative provisions, grouped under the four objectives are set out below. In addition to the amendments required to effect the policy objectives there are additional technical and consequential amendments set out in the Bill.
Credit unions fulfil an important role in communities across Ireland. This role has been emphasised further by bank branch closures and the impending exit of Ulster Bank and KBC. In recognition of this role the Bill includes an additional object in Section 6 “to promote and provide support to co-operative groups and voluntary associations”. Currently there is no recognition of or reference to the volunteer ethos of credit unions in the Act.
There are two legislative provisions categorised under this objective.
The first provision is a clarification and a broadening of the language in Section 43(2)(b) of the Act to make it clear that credit unions can invest in credit union service organisations. Enhanced collaboration is central to the future of the credit union movement. Increased cooperation will allow credit unions to better serve their members by increasing the range of services offered.
The second provision is the proposed introduction of corporate credit unions, a credit union whose members would be other credit unions, as entities through which credit unions can further collaborate. Corporate credit unions could allow an additional regulated structure through which credit unions could collaborate.
There are a number of amendments under this objective which are intended to facilitate a greater focus on strategic planning and redress the balance of responsibility on the board between directors and management. These provisions include:
At present it is a lottery as to whether a member can access the fullest range of services. If a member’s local credit union doesn’t provide a current account or mortgage lending they can’t join a credit union that does. Nor can the credit union introduce the member to another credit union, though they can introduce a member to a bank or non-bank. And while the common bond may appear to protect a credit union from competition from other credit unions, it does nothing to prevent competition from banks or non-banks.
The purpose of the amendments under this objective is to increase the flexibility of the common bond and allow for practical improvements to help credit unions increase competitiveness and deliver a greater range of services to more members. These amendments are seen as a step towards ensuring accessibility to services for all members regardless of their common bond.
The legislative provisions under this objective include amendments which will:
A provision has also been included to increase the interest rate cap from 1% to a cap set by the Minister (likely to be 2% per month), a proposal which was previously included in stand-alone legislation – the Credit Union (Interest on Loans) Bill 2019.