Credit union probity guides

The Central Bank has formally published new fitness and probity guidelines for the credit union movement, in a bid to improve governance standards across the network.

While the new credit union registrar, Sharon Donnery, said last week that initial implementation of the guidelines has been put back from the beginning of next month to the start of August, the regime will still be introduced on a phased basis, as recommended by last year’s Commission on Credit Unions report.

The new code requires that credit union managers and senior staff must be competent and capable; must act honestly, ethically and with integrity and be financially sound.

Under the new rules, it will be an offence for any credit union to permit a staff member to perform “controlled functions” and “pre-approval controlled functions” unless they fully comply with the new suitability standards.

The Central Bank can remove, suspend or prohibit staff from performing controlled functions if concerns arise regarding their standards.

Controlled functions generally apply to work carried out by the likes of risk officers, money laundering/fraud officers, compliance officers and internal audit positions.

PCFs relate to individual unions’ chairpersons and managers.

While there has been a general fitness and probity regime for the wider financial services industry in place since late 2011, credit unions have been exempt and the new guidelines have been tailored for the movement’s own needs.

“The introduction of a fitness and probity regime for credit unions will help improve governance standards at board and management levels and will complement the new governance framework for credit unions set out in the Credit Union and Co-operation with Overseas Regulators Act 2012,” Ms Donnery said yesterday.

The new regulations will eventually apply to all credit unions — regardless of size — by August 2015. However, by the beginning of this August, the rules will apply to those unions with total assets of €10 million or more.

Within that bracket of credit unions, existing and new PCFs/chairs and managers will be subject to the regulations, with newly appointed ones required to fill out a questionnaire for the Central Bank.

The rules come into force for controlled function managers as of the start of November.