The Minister for Finance, Mr Michael Noonan T.D., has today (6th July 2016) published the Credit Union Advisory Committee (CUAC) Review of Implementation of the Recommendations in the Commission on Credit Unions Report.
The purpose of the Report was to identify recommendations made by the Commission on Credit Unions and to examine their implementation, having regard to their impact on credit unions, and environmental changes that have occurred following publication of the Commission on Credit Unions Report.
The report makes the following recommendations:
CUAC recognises that there are significant challenges in the introduction of a tiered system and that the approach adopted can be expected to have a profound long-term effect on the sector. On balance, CUAC considers a two-tier model of regulation would be appropriate for credit unions at this time.
CUAC recommends a full review of lending limits and concentration limits, including the basis of the calculation of the limits together with the liquidity requirements attaching to same.
Consultation and Engagement with the Central Bank
Clarity, certainty and transparency are essential for a meaningful engagement process. CUAC recommends the introduction of Service Level Agreements to aid this process.
CUAC recommends that a meaningful Regulatory Impact Analysis should be part of any consultation process.
CUAC recommends that proportionality be exercised in the implementation of governance requirements. CUAC also recommends that both the Central Bank and credit unions guard against excessive focus on governance to the detriment of service delivery and business growth.
CUAC considers that those credit unions that have restructured and those that restructure in the future will need additional support, which in certain cases may be technical in form. CUAC recommends that a mechanism be established to provide such support.
Business Model Development
CUAC recommends that credit unions prioritise business model development and consider investing significantly in the development of their business models either individually or collectively.
CUAC recommends that the common bond, the interest rate ceiling on loans and alternative means of voting by members be considered further by CUAC in consultation with stakeholders and taking account of international experiences.
The overarching recommendation is for the establishment of an implementation group to oversee implementation of the aforementioned recommendations.
Following on from the report presentation to the Minister, He announced that he “will establish an Implementation Group to oversee and monitor implementation of these recommendations, which will support Credit Unions in developing their business model. I look forward to receiving regular updates on developments.”
The full report can be accessed below:
CUAC Review of Implementation of the Recommendations in the Commission on Credit Unions Report,