Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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469. To ask the Minister for Finance the action being taken to deliver a strong and vibrant credit union sector; and if he will make a statement on the matter. [18437/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government welcomes the important work credit unions are doing to support communities throughout Ireland at this difficult time and recognises the key role that credit unions play in the delivery of financial services in local communities across Ireland. The Minister of State in my Department, Sean Fleming TD, has credit unions as part of his remit.

The Government regularly engages with the sector to discuss its current and future plans. I met all of the credit union representative bodies in September 2020, the third such meeting during 2020. In addition, Minister of State Fleming met two of the main representative bodies in January 2021 and again in March 2021. Minister of State Fleming has also met with a number of individual credit unions and groups of credit unions since his appointment in July 2020.

There are a number of commitments set out in Programme for Government, including a review of the policy framework in which credit unions operate. As part of the review, the Department has held extensive engagement with the credit union representative bodies since September 2020 to seek feedback on their key priorities for the sector. In addition, the Department is taking into account work already completed by the Credit Union Advisory Committee (CUAC). The review is now at an advanced stage.

In terms of delivery of a strong and vibrant credit union sector and supporting and enabling the sector to grow, the following are some recent developments in relation to lending and investment regulations, SME lending, access to finance for retrofit, current accounts and investment in Approved Housing Bodies (AHBs).

Review of Lending and Investment Regulations

The Central Bank has in recent years completed reviews of both the lending and investment frameworks to ensure that credit unions operate under a framework that is both tailored and proportionate, to reflect the unique nature of the sector, and to provide flexibility for credit unions who have ambitions to grow.

Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in SME and mortgage loans, with further additional lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As at December 2020, credit unions had a combined mortgage and SME loan book of circa €344 million, an increase of 12% year-on-year.

The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including accounts in authorised credit institutions, certain bank and corporate bonds, sovereign bonds and investments in Tier 3 Approved Housing Bodies (AHBs) to provide social housing.

SME Lending

I very much welcome the recent announcements that nineteen credit unions, supported by ILCU, CUDA and Metamo, have been approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. With their local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.

Access to Finance for Retrofit

As you will be aware, the Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.

Current Accounts

The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 51 credit unions, representing circa 50% of sector assets, currently have approval to provide Member Personal Current Account Service (MPCAS).

Investment in Approved Housing Bodies

Since 1 May 2018 it has been possible for credit unions to invest in Approved Housing Bodies through a regulated vehicle. I understand that a number projects are being progressed by the sector at present, which may lead to investment in AHBs.

Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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470. To ask the Minister for Finance his plans to enable credit unions to become involved in financing housing projects; and if he will make a statement on the matter. [18438/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In answering the Deputy's question, I am referring to the sector's involvement in social housing projects.

Following a review of the investment framework for credit unions in 2017, the Central Bank introduced amending investment and liquidity regulations for credit unions. Since 1 March 2018, credit unions have been permitted to invest in regulated investment vehicles where the underlying investments are investments in Tier 3 Approved Housing Bodies (AHBs) for the provision of social housing. The regulations require that investments by credit unions in Tier 3 AHBs must be made through a regulated investment vehicle. The maximum permitted investment amount per credit union is 50% of a credit union's regulatory reserves where a credit union has total assets of at least €100 million and 25% of a credit unions regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of close to €700 million.

As such, the Government and the Central Bank have fulfilled their role and it is now up to both the credit union and social housing sectors themselves to progress and develop any specific funding mechanisms. I understand three groups are currently seeking to establish Special Purpose Vehicles (SPVs) to allow investment into Tier 3 AHBs, including the two credit union representative bodies (the Irish League of Credit Unions and the Credit Union Development Association).

It should be noted that the Department of Housing, Planning, Community and Local Government is the department with primary responsibility for the formulation and implementation of policy, and for the preparation of legislation, in relation to housing.