Central Bank appoints advisers to beef up credit union regulation

The Central Bank has appointed a number of major accountancy firms to help assist it with its increased regulation of the credit union sector.

The appointment of the firms comes against the background of 189 credit unions operating with lending restrictions and with less than 10%, or only 18, allowed to lend €40,000 and more.

This has prompted Fianna Fáil’s finance spokesman Michael McGrath to claim the credit union sector “is now overburdened with regulatory restrictions and limitations which is stifling its growth potential”.

Now, the Central Bank has confirmed that six firms have been appointed to a so-called multiple supplier framework agreement after receiving 14 separate tenders to carry out asset reviews of credit unions.

Inspections will focus on four areas — lending, investments, fixed assets, and governance.

The firms appointed are Deloitte & Touche, Ernst & Young, Grant Thornton, KPMG, EisnerAmperMKO Ltd, and PwC.

In addition, the Central Bank has appointed six firms in respect of a multiple supplier framework agreement for credit union assessments and regulatory framework support.

The Central Bank received nine tenders for this work and has appointed Baker Tilly Ryan Glennon, Deloitte & Touche, Grant Thornton, EisnerAmperMKO Limited, KPMG and PwC.

Asked to comment on Mr McGrath’s claim, a spokesman for the Central Bank said: “The Central Bank recognises the distinct and important role that credit unions play in Irish society and the financial sector, and is committed to achieving our vision of financially strong, well-governed credit unions providing services to current and new members.

“The Central Bank also recognises the need for credit unions to grow income as a requirement for sector viability.

“We are committed to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework.

“It has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members’ savings.

“In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, may apply for a review of their lending restriction.

“Where credit unions submit applications, which demonstrate evidence of compliance with the requirements set out in our February 2015 communication, lending restrictions will be lifted.”

The closing date for submission of applications under this review initiative is 30 September 2015.”

He pointed out that the Central Bank intends to invite interested parties in the credit union sector to participate in focused dialogue in the coming months with a view to gaining a better understanding of how credit unions want to develop their business model.