Credit Union reform in Northern Ireland

The joint HM Treasury & DETI consultation document on the reform of credit unions has recently been published:

http://www.hm-treasury.gov.uk/d/consult_ni_credit_unions.pdf

The proposals for regulatory reform follow the review of the legislative framework which was published in July 2009:

http://www.hm-treasury.gov.uk/d/review_legislativeframework_creditunions080709.pdf

The Treasury has put forward the following preferred option for reform of the sector in Northern Ireland:

The regulatory functions would transfer from DETI to the Financial Services Authority (FSA) whilst the registration of credit unions would remain within the remit of the DETI. The legislative functions would remain with the Northern Ireland Assembly.

The transfer to the FSA would enable credit unions to access both the Financial Services Compenstion Scheme (FSCS) and the Financial Ombudsmen Service (FOS). This would offer greater protection to credit union members in the event of a collapse of their credit union.

The FSCS currently provides up to £50,000 protection of savings per member in the event of a collapse.

Regulation by the FSA would also enable access to U.K Government initiatives such as the Growth Fund and Child Trust Fund.


Whilst much of the discussion has rightly focused on the FSA debate another interesting aspect of the consultation process is the scrutiny of credit unions investing their assets in their local communities.

Question 4 of the consultation document queries whether credit unions in Northern Ireland should be given powers to re-invest assets into community development and community enterprises. Such a power would go beyond that envisaged for credit unions in Britain and offer the kind of community investment powers currently enjoyed by credit unions in the ROI.

The ability to re-invest credit union assets into community enterprises could prove to be a big boost for the social economy sector in general with increased investment the result. There are numerous examples of this already occuring in the ROI to good effect and there will undoubtedly be calls for credit unions in Northern ireland to be able to wield such investment powers.

The consultation period will end on the 24 May 2010.