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Credit Union Bill 2012: From the Seanad (Continued)

Thursday, 13 December 2012

Dáil Éireann Debate
Vol. 786 No. 3

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Seanad amendment No. 15:

Section 8: In page 11, line 9, to delete "The Bank may" and substitute the following:
"For the adequate protection of the savings of members of credit unions the Bank may".

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Seanad amendments Nos. 16, 22, 23 and 25 are related and may be discussed together.

Seanad amendment No. 16:

Section 8: In page 11, line 11, after "savings" to insert the following:
"(expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount)".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes A number of minor technical amendments were made to section 8 which allow the regulations to set limits in the form of a monetary amount as well as a percentage. This section gives effect to recommendation 10.3.27 of the report of the Commission on Credit Unions. It repeals section 27 of the principal Act and replaces it with a provision allowing credit unions to raise funds by issuing shares to members or by accepting deposits. The Central Bank may make regulations in regard to setting limits on the amount of savings or category of savings a member can hold, the ratio of deposits to shares the credit union may hold and any other requirement or limit on the bank consistent with that.

Amendments Nos. 23 and 25 are minor technical amendments which allow the regulations to set limits in the form of a monetary amount as well as a percentage.

  Seanad amendment agreed to.

Seanad amendment No. 17:

Section 8: In page 11, line 17, to delete "appropriate" and substitute "necessary".

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Seanad amendments Nos. 18, 19 and 118 to 120, inclusive, are related and may be discussed together.

Seanad amendment No. 18:

Section 9: In page 11, line 26, to delete ""27A.—In addition to" and substitute ""27A. —(1) In addition to".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes Seanad amendments Nos. 18 and 19 involve a redraft of the Bill as published. Following further consideration of the Bill, it was felt that the provisions under section 29, which propose to insert a new section 84A into the 1997 Act, would be more suitable under section 9. The latter deals with the policies, procedures and practices a credit union must have in place to ensure it is compliant with requirements imposed on it. For example, the Central Bank may make regulations imposing liquidity requirements on credit unions under section 30 of the Bill. At present, credit unions have a minimum liquidity requirement of 20%. The amendment allows the Central Bank to make regulations prescribing the operational practices, policies and procedures to be adopted by the credit unions more generally. These may include requiring credit unions to adopt monitoring procedures to ensure the 20% liquidity requirement is complied with. Regulations may also require credit unions to ensure people involved in monitoring liquidity have an understanding of the calculation of liquidity and maturity mismatches. These regulations may also deal with reporting requirements, including arrangements for reporting breaches to the board of directors of the Central Bank. A number of consequential amendments following on from amendment No. 18 were also made in the Seanad.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty Amendment No. 19 gives the Central Bank and the registrar of credit unions broad regulatory powers. I am not objecting to that, because it is the purpose of the Bill. However, I have made the argument consistently as the legislation progressed through this House that a memorandum of understanding between the credit union movement and the Central Bank would strengthen the Bill and would be helpful in terms of identifying what each should expect of the other. I have lost the debate on that point and do not intend to re-engage in it now. However, I will make a last-ditch appeal to the Minister, Deputy Michael Noonan, to consider, after the Bill has passed, the merits of having a memorandum of understanding between the credit union movement and the Central Bank. The Minister has made positive soundings in this regard.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett To echo Deputy Pearse Doherty's point, the credit union representatives to whom I spoke said they would find it very helpful if the requirements and obligations they must meet were set down in a simple and readily understandable way. The Bill has been much improved since its introduction and we have already had this particular discussion. Nevertheless, I urge the Minister to consider what is a reasonable request by the credit union sector.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes I understand the Minister, Deputy Noonan, has discussed this issue with the Deputies. A consultation protocol was established two weeks ago. The Minister's view is that were he to include provision in the Bill for what the Deputies are proposing, that might tie the hand of the regulator and be too prescriptive. The Oireachtas gives the regulator powers on the basis that he or she will operate them in accordance with the independence of the office. The Minister has made clear that he has an open mind on the issue. As I said, the consultation process is now established and we will glean something from that. However, the Minister is not proposing at this stage to formalise it in the way the Deputy has suggested. We do not wish to cut across the very important work of the regulator in this matter or to tie his or her hands. I hope common sense and judgment will prevail in dealings between the Central Bank, the regulator and the credit unions, which will ensure there is no need to impose prescriptions on the regulator. A memorandum of understanding is a more formal way of specifying what we all want to see, namely, a proper protocol for dealing with these matters. We will keep a watching brief on the situation.

  Seanad amendment agreed to.

Seanad amendment No. 19:

Section 9: In page 11, line 33, to delete "legislation."." and substitute the following:
"legislation.

(2) Without prejudice to the generality of subsection (1), the Bank may make regulations prescribing—
(a) certain oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements which the credit union is required to maintain where the Bank considers this is appropriate in the interest of protecting members’ savings or otherwise appropriate to ensure compliance with the requirements imposed under financial services legislation;

(b) requirements in relation to the oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements required to be maintained under this section."

  Seanad amendment agreed to.

Seanad amendment No. 20:

Section 10: In page 11, line 36, to delete "A credit union may" and substitute the following:
"For the purpose of its objects as referred to in section 6 a credit union may".

  Seanad amendment agreed to.

Seanad amendment No. 21:

Section 10: In page 11, line 38, to delete "The" and substitute the following:
"For the adequate protection of the savings of members of credit unions, the".

  Seanad amendment agreed to.

Seanad amendment No. 22:

Section 10: In page 11, line 45, after "money" to insert the following:
"(expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount)".

  Seanad amendment agreed to.

Seanad amendment No. 23:

Section 11: In page 12, line 38, after "amount" to insert the following:
"(whether expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount)".

  Seanad amendment agreed to.

Seanad amendment No. 24:

Section 11: In page 13, line 27, after "relates" to insert the following:
"and for the adequate protection of the savings of members of credit unions".

  Seanad amendment agreed to.

Seanad amendment No. 25:

Section 11: In page 13, line 32, after "the" where it secondly occurs to insert "total, including percentage,".

  Seanad amendment agreed to.

Seanad amendment No. 26:

Section 11: In page 13, line 43, to delete "The Bank may" and substitute the following:
"For the adequate protection of the savings of members of credit unions the Bank may".

  Seanad amendment agreed to.

Seanad amendment No. 27:

Section 11: In page 13, line 44, to delete "appropriate" and substitute "necessary".

  Seanad amendment agreed to.

Seanad amendment No. 28:

Section 11: In page 14, subsection (2), between lines 28 and 29, to insert the following:
"(a) there is a subsisting approval given by the Bank under subsection (2) of section 35 of the Principal Act in respect of the limits set out in that subsection,".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes An amendment was made to section 11 on Committee Stage in the Seanad to provide for a transitional arrangement whereby an approval by the Central Bank under the existing section 35(2) of the Credit Union Act 1997 in respect of longer-term lending by a credit union would continue to have effect upon commencement of this section. The amendment simply clarifies the existing position in order to put it beyond doubt.

  Seanad amendment agreed to.

Seanad amendment No. 29:

Section 12: In page 15, line 13, to delete "subsection (5)" and substitute "subsection (6)".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes This amendment was made on Committee Stage in the Seanad. It is a minor amendment to rectify an incorrect cross-reference in the text.

  Seanad amendment agreed to.

Seanad amendment No. 30:

Section 12: In page 15, line 22, after "subsection (2)" to insert the following:
"and having regard to the need to avoid undue risk to members’ savings".

  Seanad amendment agreed to.

Seanad amendment No. 31:

Section 12: In page 15, line 25, after "investments" to insert the following:
", including, where appropriate, any investment project of a public nature".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes This is another of the Opposition amendments that was debated with the Minister, Deputy Noonan, at the select committee.


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