Credit Unions

Credit Union Policy Section is primarily responsible for the development of efficient and effective policies for credit unions.

Principal Objectives

 

Principal Objectives

 

 

Legislation

 

Credit Union Act 1997

Credit unions in Ireland operate under credit union specific legislation. The principal legislation covering credit unions are the Credit Union Act 1997, as amended, and the Credit Union and Co-operation with Overseas Regulators Act 2012, known collectively as the Credit Union Acts 1997 – 2012.

The Credit Union Act 1997 established a Registrar of Credit Unions and included a relaxation of common bond definitions, an increase in the duration and amount of savings and loans allowed and also permitted credit unions to provide additional services.

 

Credit Union and Co-operation with Overseas Regulators Act 2012

Following publication of the Report of the Commission on Credit Unions, the Credit Union and Co-operation with Overseas Regulators Act 2012 was enacted. The 2012 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, savings 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, ReBo.
  • Stabilisation – providing financial support to viable but undercapitalised credit unions.

 

Financial Position

 

As at 31 December 2017, there were 268 active credit unions with assets of approximately €16.9 billion and membership of around 3.1 million. 53 credit unions have assets greater than €100m and collectively account for 55% of the assets of the sector. Credit unions are very liquid with an average liquidity ratio of 37% and have an average regulatory reserve of 16.8%. Average arrears are now 7.2%. As with most financial institutions in the current low interest rate environment, credit unions need to increase lending having an average loan to asset ratio of 27%. 

 

 

General Information

 

Credit Unions and the Irish Economy

 

Credit Union Members in Ireland3.1 Million
Number of Employees3,500
Number of Volunteers9,200
Average New Loan3,400
Average Saving3,900
Total Asssets €16.9 Billion
Frirst Credit Union Founded1958
Share of Personal Lending34%

*Department of Finance Estimate based on Central bank data on Irish Resident Credit Institutions

 

Credit Unions and the Irish Economy

 

  • Ireland has one of the highest levels of credit union member penetration in the world.
  • The credit union sector is a large employer with 3,500 employees, putting it in the top 5 financial services employers in the State.
  • Credit unions have a volunteer ethos and community focus with 9,200 volunteers involved in the sector.
  • Credit unions ranked Number 1 again in 2017 for Customer Experience Excellence.

 

 

Credit Union Stakeholders

 

image of Credit Union Stakeholders logo's including Dept. of Finance, Central Bank of Ireland, ILCU, CUDA, CUMA, NSF, CUAC, ReBo

 

  • 268 active credit unions in the Republic of Ireland serve the needs of 3.1 million members.
  • The role of Minister for Finance is to ensure that the legal framework for credit unions is appropriate.
  • The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions in Ireland.
  • The main representative bodies are:
    • ILCU– 389[1] credit unions affiliated to League in the Republic of Ireland and Northern Ireland.
    • CUDA – has 14 owner member credit unions and also provides affinity membership for a number of additional credit unions.
    • CUMA– represents credit union managers in Ireland.
    • NSF – supports board oversight committees in the Republic of Ireland and supervisory committees in Northern Ireland.
  • CUAC is a statutory body providing advice to the Minister for Finance on credit union matters.
  • The Credit Union Restructuring Board (ReBo) was set up to facilitate and support credit union amalgamations. 

[1] As of 5th April 2017

 

Commission on Credit Unions

 

Image of Commission on Credit Unions publication cover

 

  • In 2011 the Government established the Commission on Credit Unions to review the future of the credit union sector.
  • The Commission presented its final Report to the Minister for Finance in March 2012.
  • Recommendations were made to strengthen the credit union regulatory framework and to provide for more effective governance and regulation.
  • The Commission on Credit Unions comprised members from various credit union stakeholder groups and included:
    • the Department of Finance
    • the Registry of Credit Unions
    • the Irish League of Credit Unions (ILCU)
    • the Credit Union Development Association (CUDA)
    • the Credit Union Managers’ Association (CUMA)
  • The Report was agreed over a nine-month period by all Commission members.
  • The Credit Union and Co-operation with Overseas Regulators Act 2012 implements over 60 of the recommendations in the Commission Report.

 

 

Credit Union Advisory Committee (CUAC)

 

 Functions of CUAC 
To advise the Minister and such other persons as the Minister thinks fit, in relation to: test
Improvement in the management of the credit unionsprotection of the intertests of memebers and creditors of the credit unionsOther matters relating to credit unions

 

  1. CUAC is a committee established under section 180 of the Credit Union Act 1997.
  2. The current CUAC consists of 6 members:
    • Lorraine Corcoran. Chair, Principal at Afanite
    • Ms Claire Byrne, CEO, St. Raphael’s Garda Credit Union
    • Mr John Doyle, Operations and Services Manager, St. Jarlath’s Credit Union, former CEO of ReBo
    • Olive McCarthy, Senior Lecturer in University College Cork (UCC)
    • Seamus Newcombe, Chief Executive, Payac Services CLG
    • Diarmaid O’Keeffe, Head of Financial Services, Eisen Amper
  3. CUAC meets on a monthly basis in the Department, with the Department providing secretariat. It regularly invites credit union stakeholders to meetings to share their views on various topics.
  4. CUAC has completed a number of research papers including, A Survey of Irish Credit Unions and Viability and Irish Credit Unions.
  5. CUAC presented its report entitled Review of Implementation of the Recommendations in the Commission on Credit Unions Report, to the Minister on 29 June 2016. The Report was published on the Department’s website on 5 July 2016.
  6. CUAC published 3 Policy Papers in December 2017 on (1) Common Bond, (2) eVoting and (3) Loan Interest Rate Cap.

 

CUAC Members

 

Lorraine Corcoran – Chair of CUAC  

  • Lorraine is a Principal at Afanite, an organisation focused on the social economy.  She is an experienced strategy consultant, leading the design and rollout of the Personal Micro Credit Initiative.  This project works with multiple stakeholders including government and credit unions to offer an alternative to high cost credit for low-income individuals.  She has also worked with the Department of Rural and Community Development and the Social Finance Foundation to deliver a research report that will underpin the first Irish Social Enterprise Policy and Implementation Roadmap.  She is a member of the Irish Corporate Social Responsibility Forum, chairing a workgroup to deliver the national 2017-2020 plan.   Prior to founding Afanite, Lorraine worked in Bank of Ireland for eighteen years.  She is a graduate of Trinity College Dublin and holds a Masters in International Relations from Dublin City University.

 

Claire Byrne

  • Claire is CEO of St Raphael’s Garda Credit Union since 2010.  She has led the business on a transformational change programme that has included managing the transition to a new regulatory environment, restructure and realignment of roles and responsibilities and strengthening the governance framework of the organisation. Prior to joining the credit union, she spent many years working in the financial services sector and operating at a senior level, she has extensive experience in change management, driving business growth and strategic planning.  Claire holds a post graduate Diploma in Corporate Governance from UCD Smurfit Business School and a first class honours BBS and MBA, both from DCU. 

 

John Doyle

  • John having graduated with a BA in Accounting & Finance from DCU in 1987, John pursued a finance career in London qualifying as a member of the Chartered Institute of Management Accountants in 1989. He then held a number of senior finance roles in blue chip retail organizations in Ireland, UK and Eastern Europe. John’s involvement with Credit Unions stretches back to 2007 when he became a supervisor, and subsequently a director, of Ballyhaunis Credit Union. As CEO of the Credit Union Restructuring Board he oversaw the voluntary restructuring of the Irish Credit Union sector and he is now employed as Operations and Services Manager at St Jarlath’s Credit Union in Tuam, Co Galway.

 

Olive McCarthy

  • Olive is Director of the Centre for Co-operative Studies and senior lecturer with the Department of Food Business and Development at University College Cork. She completed a masters by research on credit union management and a PhD on credit union effectiveness and performance. She has since conducted and disseminated a wide range of credit union research and is particularly interested in co-operative values and principles. She has considerable experience in the credit union movement, having served in various local and national credit union positions since 1995. She is currently a volunteer with St. Michael’s Credit Union in Cork.

 

Seamus Newcombe

  • Seamus is Chief Executive of Payac, the Credit Union owned services organisation delivering current account services to Credit Unions in Ireland. Seamus joined Payac from Bank of Ireland where he held the role of Head of Bank of Ireland for Leitrim Roscommon. Seamus started his career with Permanent TSB, and has also held management positions with IFG Group, Bailieborough Credit Union and Link Credit Union where he was CEO. Seamus is a graduate of University of Ulster, University College Dublin and Boston College’s School of Management. He is a Certified Risk Manager, Certified Data Protection Officer and Qualified Financial Advisor, as well as completing a Masters of Science in Executive Leadership, with his dissertation entitled “The future of Credit Unions 3.0”. Seamus is a member of the Association of Compliance Officers of Ireland, Institute of Bankers, and is a former member of the National Executive of CUMA.

 

Diarmaid O’Keeffe

  • Diarmaid is a Partner and Head of Audit in EisnerAmper Ireland (“EisnerAmper”).  EisnerAmper is an Irish owned firm of specialist accountants with a niche focus on three markets: Financial Services; International Trade; and Government. EisnerAmper provides Audit, Tax, Risk & Regulatory, Advisory, and Outsourcing services to clients including credit unions, banks, regulators, government departments, established international corporates and start-ups doing business in and through Ireland. As Head of Audit, Diarmaid has extensive credit union experience having undertaken multiple credit union audits, regulatory inspections and investigations arising from having worked and/or liaised with credit unions, credit union regulators (Central Bank) and other bodies (e.g. Department of Finance and the Credit Union Restructuring Board (“ReBo”)). Diarmaid has directly applicable credit union experience and expertise in the following areas: audit, internal audit, business analysis, risk management, corporate governance, accountancy, finance, economics, financial regulation and credit management.

 

 

CUAC Report Implementation Group

Publication of CUAC’s Report in July 2016 was the beginning of a process. From September 2016 onwards CUAC continued working with the Department to enable a coherent implementation plan be devised. Recommendations in the report relate to tiered regulation, Section 35, consultation and engagement with the Central Bank, governance, restructuring, business model development and miscellaneous topics including the common bond, credit union loan interest rate and voting matters.

The Implementation Group consists of a member from ILCU, CUDA, CUMA, NSF, CUAC and the Central Bank and is chaired by the Department. The implementation group has been meeting monthly since February 2017. The Implementation Group submitted two papers to the Central Bank in November 2017 (1) S35 Scoping Paper and (2) Consultation and Engagement Paper and is currently preparing a paper on Tiered Regulation.

 

Credit Union Restructuring Board (ReBo)

As recommended by the Commission on Credit Unions, the Credit Union Restructuring Board – ReBo, was established under Part 3 of the 2012 Act on 1 January 2013 to oversee and facilitate a restructuring programme in a voluntary, incentivised and time-bound manner. Under the restructuring process, credit unions approved by ReBo for restructuring – by way of amalgamations or transfers – were provided with funding, where required, which was subject to specific conditions, to ensure they had adequate capital and to upgrade systems. The Commission was cognisant that restructuring would not be for all credit unions as some credit unions will continue to operate successfully on a stand-alone basis should they so choose, provided that they have a viable business model capable of meeting regulatory requirements. 31 March 2016 was the final date for acceptance by ReBo of any further restructuring proposals from credit unions. ReBo has facilitated and overseen credit union restructuring on a voluntary, incentivsed and time bound basis and completed the performance of its restructuring functions by 31 March 2017. Please click Credit Union numbers to view a chart of credit union numbers over the last ten years.

By the time ReBo ceased operations on 31 March 2017, ReBo had supported a total of 117 merger projects involving 212 credit unions. Of these 117 merger projects, 82 projects had concluded mergers involving 156 individual credit unions.

A final section 43 review of ReBo’s work has demonstrated that ReBo has completed the performance of its functions under Part 3 of the 2012 Act and the Minister for Finance has agreed to dissolve ReBo. It was intended that ReBo would be dissolved by Order as set out in s43 of the 2012 Act. However, following legal discussions with the Attorney General’s Office we were advised that the most effective way to dissolve ReBo is by way of primary legislation to ensure continuation of certain sections within Part 3 of the 2012 Act. Draft Heads of the Bill for dissolution of ReBo were approved by Government in December 2017 and are currently being drafted by the Office of the Atttorney General. Contracts of the 2 remaining staff of ReBo concluded on 31 July 2017 and the Minister accepted the resignation of the Board on 31 July 2017. While awaiting legislation to wind-down ReBo the Minister for Finance approved the appointment of two Department officials to the Board of ReBo from 1 August 2017 to manage matters during the period up to wind-down.

 

While ReBo has completed its restructuring functions, any outstanding projects have been transferred to the Central Bank. In addition to those projects, 23 additional projects commenced post ReBo demonstrating that restructuring of the credit union sector is continuing.

A copy of ReBo’s final Report published in July 2017 – Restructuring of the Credit Union Sector in Ireland 2013 – 2017 can be accessed here.

 

Any queries in relation to Credit Union Restructuring Board – ReBo, should be addressed to:

Department of Finance

Shareholding and Financial Advisory Division

7 – 9 Merrion Row

Dublin 2 

 

Publications:

January 2019 – CUAC Report Implementation Group Final Report

June 2018 – Information Note – Credit Union Levies & Charges

December 2017 – Credit Union Advisory Committee Policy Paper Publications

August 2017 – Credit Union Slide Deck

July 2017 – ReBo Final Report 2017 – Restructuring of the Credit Union Sector in Ireland

June 2017 – ReBo Final Section 43 Review

June 2016 – Review of Implementation of the Recommendations in the Commission on Credit Unions

April 2016 – CUAC Research ‘A Survey Of Irish Credit Unions’

January 2016 – CUAC Research ‘Viability And Irish Credit Unions’

March 2012 – Report Of The Commission On Credit Unions