Central Bank and Financial Regulator Begins Strategic Review of Credit Union Sector 

Press Release 27 July 2010

Specialist firm appointed to Conduct Comprehensive Independent Review

Tá an preasráiteas seo ar fáil as gaeilge chomh maith

The Central Bank and Financial Regulator today announced the appointment of Grant Thornton to conduct an independent strategic review of the credit union sector in Ireland. The review was requested by the Minister for Finance to assist in the development of a modern credit union sector, identifying the legislative and regulatory framework required to build a strong and sustainable sector.  The first phase will concentrate on establishing the financial position and risk profile of the credit union sector.

In the current challenging economic environment it is important in the interest of members and the sector as a whole that there is a strong and healthy credit union sector. The significance and scale of the sector means that the regulatory regime has to be adapted to ensure credit unions remain viable in a new financial environment. The responsibility for maintaining sustainable credit unions and the future development of the sector rests with the current boards of directors, managers and representative leadership within the movement.  Strong leadership will be required to steer credit unions through these uncertain times.  If credit unions are to continue to achieve their mandate and develop as viable alternative financial services providers for their members then operational and regulatory change is necessary.

James O’Brien, Registrar of Credit Unions said ‘We would encourage credit unions to engage positively with the review. It offers a significant opportunity for all credit unions, large, medium and small, and the sector as a whole to develop a robust and sustainable business model. To support and encourage this outcome, our regulatory focus over the next few years will be based on the principle of ‘strong credit unions in safe hands’.

The first phase of the review will include a detailed factual overview and expert assessment of the financial position and risk profile of the credit union sector as whole. Grant Thornton will engage and consult directly with credit unions, carrying out surveys, interviews and on site reviews to collect information to make specific proposals to strengthen the soundness of credit unions. This will also involve assessing the adequacy and appropriateness of:

  • External support mechanisms;
  • Governance and competency;
  • Operating Model; and
  • Regulatory and legislative framework for credit unions.

The Central Bank and Financial Regulator has also announced that it intends to hold its inaugural ‘Credit Union Regulatory Forum’ in the autumn. The forum meetings, which will be held on a regional basis, will be an opportunity for credit unions to express views on current issues facing the sector and for credit unions to hear about the Registrar’s regulatory approach.  It is intended that the forum will be held annually.

Credit unions have also been notified that the deadline for submissions on the recently issued consultation paper ‘Stabilisation Support for Credit Unions’ has been extended to 24 September 2010, to provide sufficient time for the preparation of submissions.