Consultation process on credit union levy begins

Credit unions are to be asked to pay €5 million-a-year into a stabilisation fund under proposals being considered by the Minister for Finance, Michael Noonan.

Mr Noonan is likely to make a final decision on the stabilisation levy for the Republic’s 390 credit unions following a two-month consultation period that is now under way.

The introduction of a levy was recommended in a report by the Commission on Credit Unions, which was published in 2012.

The Credit Union and Co-Operation with Overseas Regulators Act 2012 enables the Minister for Finance to provide stabilisation support to a credit union where it has been approved by the Central Bank. Costs incurred in the provision of stabilisation assistance are to be fully funded by credit unions

The Central Bank can only approve the provision of stabilisation support if a credit union’s regulatory reserve is equal to or greater than 7.5 per cent of its total assets, and if it is seen as having a viable future.

Since October 2013 credit unions have had to comply with a raft of new regulations, including new lending limits; the application of the Central Bank’s fitness and probity regime; and the appointment of a compliance officer, risk manager and internal auditor. More changes are on the way, including the development of a training and standards policy by December and the mandatory reduction in the size of boards.

The consultation period will last until April 25th. Interested parties are invited to make submissions by email to stabilisation@finance.gov.ie