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Ireland Enacts Credit Union Legislation

by Jason Gorringe,, London

28 December 2012

Major new reforms to overhaul Ireland's credit union sector have come into force, implementing over 60 recommendations made by the Commission on Credit Unions.

The enactment of the Credit Union and Co-operation with Overseas Regulators Act 2012 clears the way for EUR250m (USD331m) to be contributed by the government to the Credit Union Fund set up under the legislation. According to the Finance Ministry, this funding will support the restructuring process and underpin the stability of the credit union sector. The provisions relating to restructuring, stabilization and Central Bank co-operation with overseas regulators commenced immediately upon the bill's passage into law.

The reforms impact across a variety of areas. Prudential regulation, including reserves, liquidity, lending and investments, will be affected, as will the overall governance of a credit union. For instance, a director's term will be limited to 12 years in aggregate in any 15 year period. The legislation also provides for a process of amalgamations and transfers to be undertaken on a voluntary, incentivized and time-bound basis and overseen by a new Restructuring Board.

Commenting on the legislation, Finance Minister Michael Noonan said:

“This is the first major overhaul of credit union legislation in 15 years. It is the product of extensive engagement with the credit union movement through the Commission on Credit Unions Report. The Bill was the subject of extensive and constructive debate during its passage through both Houses and the enacted legislation has been enhanced and improved by the parliamentary process."

"The Act paves the way for the EUR250m contribution to the Credit Union Fund by the taxpayer before the end of the year. This is a key investment in the future of the credit union movement in this country and it is important that all concerned now engage with the new reforms to ensure their success.”

TAGS: Finance | tax | investment | Ireland | law | banking | legislation | regulation

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