Credit Unions: a lot done, more to do

With the publication of the first Administrative Sanctions enforcement case to be taken against a Credit Union in October 2015, it is clear that the regulation of this industry is high on the Central Bank’s agenda. The Central Bank’s Registrar of Credit Unions has voiced her concern over the slow pace of progress in achieving necessary transformation of the Credit Union business model, following the financial crisis. In Ms McKiernan’s words “it is fair to say that the picture is one of improvement in some areas and continuing concerns in others.” 

The Credit Union Restructuring Board (ReBo) was established by the Minister for Finance to facilitate and oversee the restructuring of Credit Unions in accordance with the provisions of the Credit Union Act 2012.

The guiding aims of ReBo’s mandate are:

a. the protection of credit union members’ savings;
b. the stability and viability of credit unions and the sector at large;
c. the preservation of the credit union identity and ethos; and
d. contributing to the development of a world class credit union sector in Ireland.

According to ReBo’s report in October 2015, it has assisted 74 individual credit unions in 36 completed re-structuring projects. In total 189 Credit Unions have engaged with ReBo at varying stages of the re-structuring process. That still leaves 181 Credit Unions that have not engaged with the services offered by ReBo. ReBo has announced that it will continue to accept re-structuring proposals until 31 March, 2016. 

While Ms McKiernan said that a lot of the mergers are still in the “bedding-phase”, the Central Bank is concerned about the lack of benefits which have been seen to date as a result of the re-structuring process. There is a lot done and more to do.

The Central Bank will continue in its supervisory function, taking enforcement action where necessary in the event of non-compliance by Credit Unions with the new regulatory regime. The Central Bank will continue to review business model viability in Credit Unions which includes financial resilience, governance, credit and market risk and certain operational risks. For those Credit Unions not currently engaged in the ReBo process, a short window of opportunity remains open.

Ogier Leman advises regulated entities on their obligations pursuant to the Central Bank’s Regulatory and Compliance codes. In particular we have experience in working with Credit Unions in corporate transactions, regulatory compliance and re-structuring.  Speak to our specialist financial services team to find out how we can help you.

Contact Ronan McGoldrick Dominic Conlon  or Laura Daly  for further information.

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