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Credit unions

Legislation on credit unions 

Click to go to the Institute web page containing a selection of Irish Credit Union laws and relevant statutory instruments.

The Credit Union (Amendment) Act 2023

The Credit Union (Amendment) Bill 2022 was sent to the President for signature in December 2023. Click here for a government press release where the Minister for Financial Services, Insurance and Credit Unions welcomed the proposed amendments to the legislation which she said aim to bring about significant reforms for the credit unions sector in Ireland and represents a very significant piece of legislation that will have far-reaching positive implications for the credit union sector in the years to come. Also ,click  for a press release of October 2023 from the Irish Dept. of Finance "Bigger and Brighter Future for Credit Unions" detailing some elements of the Bill .

The Credit Union (Amendment) Act 2023 which amends the Credit Union Act 1997 was signed into law in December 2023. Statutory instrument No. 57 of 2024 was issued on 21 February 2024 and commences the 2023 Act in phases, the first two of which are 22 February and 8 April 2024 .Statutory instrument 475 of 2024 issued in September 2024 commences further provisions of the legislation from 30 September 2024.Click for a news item on the September 2024 Statutory Instrument.

Here are some provisions of the amending legislation which may be of interest to readers including provisions relating to the accounts, board of directors and corporate credit unions.

Provisions relating to the accounts.

The requirement that the annual accounts be signed by a member of the board oversight committee is removed and they are to be signed by the manager of the credit union and member of the board of directors acting on behalf of the board (commenced 8 April 2024).

Section 6 of Credit Union Act 1997 ("1997 Act") is amended in relation to common bond provisions. It now provides that where a credit union has no website, the credit union must include in its annual accounts a description of the common bond or where the common bond is or includes “residing or being employed in a particular locality “a map on which the locality concerned is marked (commenced 8 April 2024).

Some changes are made to allow for electronic delivery of information including a provision permitting electronic delivery of notice of general meetings to the auditor and a new provision 188A has been added allowing distribution, subject to the conditions in the new section, of information including annual accounts by electronic means (both commence 22 February 2024).

Board of directors

Changes are made in relation to the board of directors of a credit union including one whereby a credit union manager can be appointed to the board of directors (new section 63A added to 1997 Act and commenced 8 April 2024).

Environmental social and governance policy has now been included as a policy for the board to approve, review and update at least every 3 years. This is by virtue of an amendment to section 55 of the 1997 Act where the board has obligations to approve review and update plans policies and procedures. These obligations were annual but with the commencement of the 2023 Act the obligation will be every 3 years (both ESG policy inclusion and three year review now commenced 30 September 2024).

There will be a requirement for the credit union to consider gender in the identification of prospective candidates for appointment to the board of directors (commenced 8 April 2024).

The provision for approval of expenses is changed from requiring approval of a majority of the board of directors to approval by at least 2 directors (excluding a director whose expenses are to be included) (commenced 8 April 2024).

In section 32 of the 1997 Act which deals with restrictions on withdrawal of shares/deposits, a change is made whereby a decision (about withdrawing savings) does not have to be mandatorily approved by the board (commenced 8 April 2024).

There are changes to the provisions on approval of loans in section 36 of the 1997 Act. The approval of two thirds of the special committee is deleted and approval of the board of directors is substituted (commenced 8 April 2024).

Corporate credit unions

The 2023 Act provides for existence of corporate credit unions. New provisions have amended section 6 of the 1997 Act. A new schedule 6 is now included in 1997 Act setting out matters to be provided for in the rules of a corporate credit union including provision for the audit of accounts by one or more auditors appointed by the credit union. This is consistent with the requirements for non-corporate credit unions.

By amendment of section 81 of the 1997 Act, the quorum for general meetings of corporate credit unions is two members.

There is no commencement date yet for the provisions for corporate credit unions.

Other changes

Section 35 of the 1997 Act is amended so that a credit union can now agree to participate in a loan to a member of another credit union (the amendments have now been fully  commenced since 30 September 2024).

Section 38 of the 1997 Act is amended so that on commencement of the provisions of the 2023 Act, the maximum interest rate that may be charged on loans made by a credit union to its members will be set by the Minister (for Finance) (commenced 8 April 2024).

Under the 2023 Act, the form of the annual compliance statement a credit union has to make to the Central Bank of Ireland (CBI) can be prescribed by CBI (commenced 8 April 2024).

 

Central Bank of Ireland (CBI) and credit unions

Readers will find some useful material on this Central Bank of Ireland page on credit unions.Click to access the CBI handbook on credit unions.

In March 2023 the Central Bank of Ireland published its ninth edition of Financial Conditions of Credit Unions, 2022.Read the press release here and the report here. The report provides an update on the financial performance and position of credit unions for the financial year ended 30 September 2022. It also provides sectoral data and commentary, and aims to inform credit union boards in carrying out their strategic analysis and decision-making. Remarks by Elaine Byrne, Registrar of Credit Unions, to the CUMA 2023 Spring Conference including remarks on the report, can be read here. 

In September 2023 the Irish Central Bank announced new requirements for certain credit union staff undertaking particular activities to meet minimum knowledge and competence standards.  These requirements are set out in the Minimum Competency Code 2017 and the Minimum Competency Regulations 2017.Click here also to read the Central Bank press release and for further links to relevant documents.

The Governor of the Central Bank addressed the Irish League of Credit Unions conference in November 2023. He spoke on a range of matters including the significant opportunity provided by the Credit Union (Amendment)  Bill and of the significant opportunities which exist in relation to credit union lending. Readers can  find  further details here .

See also the Central Bank of Ireland  December 2023  Credit Union News publication which includes a reminder to all credit unions on key financial  considerations and other matters for consideration at year end including impairment reviews of assets, liquidity management, systems of control, cybersecurity and operational resilience (including outsourcing).It also highlighted the Lending Framework Review with an expectation of publishing analysis of the review in H1,2024.

Readers may also find of interest the section on the Credit Union Sector in the Central Bank of Ireland's Regulatory and Supervisory Outlook 2024 .

Auditing -credit unions

Readers who may be involved in the auditing of credit unions can click the link to read the Irish Auditing & Accounting Supervisory Authority (IAASA ) the Audit of Credit Unions Guidance Note 02/2019 which provides guidance to auditors on the application of International Standards on Auditing (Ireland) (‘ISAs (Ireland)’) adopted by IAASA to the audit of the financial statements of credit unions in the Republic of Ireland.

As regulated entities, the audit of credit unions will present additional challenges above those encountered in a standard audit. As a result, it is strongly advised that auditors use tailored procedures to address this challenge. The Institute's practice consulting team has developed Credit Union PQA 2023 which address the audit of credit unions.

Other  

Click the article  entitled "New era for credit unions" dated February 2023 by Gene Boyd, FCA, a risk management consultant and author of The Governance of Credit Unions in Ireland.  The article reviews the history of credit unions and the provisions of the  Credit Union (Amendment) Bill 2022.

Watch the recording of an Institute webinar about new opportunities and challenges for credit unions in Ireland, a key service for communities. Author and governance expert, Gene Boyd was joined by David Malone, CEO Irish League of Credit Unions, Sean Hosford, CEO Health Services Staffs CU, and Prof Anne Marie Ward, Ulster University. The  presentation was followed by a panel discussion about the challenges and opportunities for credit unions in Ireland today, particularly arising from proposed amendments to the Credit Union Act, and the recent Retail Banking Review.

In March 2023, the World Council of Credit Unions  released its 2023 International Advocacy Sustainable Finance Report, “What Credit Unions should know about Sustainable Finance” which highlights important issues, trends, and recommendations to promote sustainability in the global financial sector. The report acknowledges the efforts by regulatory and standard-setting bodies in addressing climate-related financial risks and promoting sustainable finance, emphasizing the importance of proportionality language in regulatory frameworks and considering the unique benefits of the cooperative model of credit unions.

These pages are provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

Chartered Accountants Ireland can accept no responsibility for the content on any site that is linked to/from the Institute website. Links are provided in good faith for the potential support of members and students.

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