To ask the Minister for Finance his views on plans to distribute the value of the assets held by a credit union (details supplied) to its members, in view of the fact that the statement issued by the Central Bank on 2 November 2016 made reference only to the return to members of deposits held with the credit union; and if he will make a statement on the matter.
– Clare Daly T.D.
The decision to apply to the High Court to wind up Rush Credit Union Ltd was made by the Governor of the Central Bank. The legal grounds under which the Governor made this decision are set out in the Central Bank and Credit Institutions (Resolution) Act 2011.
I have been informed by the Central Bank that it made an application on 2 November 2016 to the High Court to have joint provisional liquidators appointed to Rush Credit Union Limited. Jim Luby and Tom Rogers of McStay Luby were appointed as joint provisional liquidators on that date by the President of the High Court, Mr Justice Peter Kelly. The full application will be heard on 21 November, when the Central Bank will seek the winding up of Rush Credit Union Ltd. The Central Bank took this action in order to ensure the protection of members’ savings. The credit union will not re-open and all issues relating to the wind down of services will be managed by the Joint Provisional Liquidators.
The Central Bank has further informed me that its objective is to be as transparent as possible by providing information to reassure credit union members regarding the actions taken. For legal reasons, the Central Bank is constrained in terms of the specific details it can provide, pending the decision of the High Court on 21 November 2016. The Central Bank will publish the Resolution Report and Affidavit (on a redacted basis) on its website following the full hearing for the winding up of Rush Credit Union Ltd in the High Court on 21 November 2016.
Following the appointment of the Joint Provisional Liquidators the Deposit Guarantee Scheme (DGS) has been invoked. Members of Rush Credit Union Ltd will receive compensation in respect of their eligible deposits up to €100,000 per member. The DGS will make compensation payments as early as possible within the statutory deadline of 20 working days to duly verified depositors.
Rush Credit Union Ltd has been monitored by the Central Bank over a number of years and during that time the Central Bank investigated aspects of its business. The Central Bank is of the view that there are a number of reasons for the failure of Rush Credit Union Ltd which have manifested over an extended period of time. These include issues relating to governance, internal controls, lending practices and valuation of its premises. Despite assurances given by Rush Credit Union Ltd to the Central Bank, and the credit union having been provided with an opportunity to address the issues concerned, in the opinion of the Central Bank, they have not been adequately addressed. In applying for winding up, the Central Bank has also considered Rush Credit Union Ltd’s recent financial performance and its constrained capacity to ameliorate its distressed financial position. In the absence of taking the proposed action, the nature of the financial, governance and internal controls issues, could lead to a disorderly collapse of Rush Credit Union Ltd.
The registration and regulation of credit unions is the responsibility of the Registrar of Credit Unions within the Central Bank, who is the independent regulator for credit unions. The Central Bank is keen that credit union services are available to the people of Rush and Lusk. I share this view. The Central Bank informs me that it is conscious that there is a demand for the services of a credit union in the local area and will examine what arrangements can be put in place to provide specific credit union services in the community in the future. In some cases, members may currently be able to avail of services in another credit union in the area as the common bond may extend into their locality or through their place of work.
While the Central Bank is willing and prepared to take the necessary action to protect the savings of credit union members, it remains fully supportive of the credit union sector in Ireland and is committed to the continued development of a strong and sustainable sector that meets members’ changing needs and protects their savings.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government’s priorities remain the protection of members’ savings, the financial stability of credit unions and the sector overall and it is determined to continue to support a strengthened and growing credit union movement.
QUESTION NOS: 18,22
DÁIL QUESTIONS addressed to the Minister for Finance (Deputy Michael Noonan)
To ask the Minister for Finance the status of the work of the Working Group on the Cost of Insurance; and the time-frame for action to be taken on the spiralling cost of insurance.
– Clare Daly T.D.
For ORAL answer on Thursday, 10 November, 2016.
The Cost of Insurance Working Group, which I am chairing, is examining the factors contributing to the increasing cost of insurance. The Working Group brings together all the relevant Departments and Offices involved with the process. Its objective is to identify immediate and longer term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector. The initial focus of the Working Group is on rising motor insurance premiums.
The core areas to be examined by the Working Group in this first phase are:
The motor insurance sector generally, at present and in recent years
The effects of legal costs and litigation processes on insurance costs
The current claims compensation arrangements and the cost of claims
Insurance data and information
The impact of accident rates
The impact of unlawful activity on the insurance sector
The Cost of Insurance Working Group has met nine times to date and will continue to meet until the end of the year.
The work is being progressed through four subgroups. The subgroups have been meeting on a weekly basis since their establishment on 1st September 2016.
The consultation process is ongoing by both the Working Group and the subgroups. These stakeholders include: Insurance Ireland, individual insurance companies, the Irish Brokers Association, AA Ireland, the Consumers Association of Ireland, the Law Society, the Bar Council, Irish Road Haulage Association, the Car Rental Council, the National Transport Authority and Tiomanai Tacsai na hEireann.
At the end of October 2016, the Working Group provided the Minister for Finance with an initial set of emerging recommendations. The Minister has considered these recommendations and I have discussed them with him. Since then, the Working Group has been working to finalise the Report and developing an action plan to enable the relevant Government Departments and Offices to commence the implementation of agreed priority actions. The report and action plan will detail any legislative or regulatory changes that may be required and will include a detailed timeline for implementation.
From the emerging recommendations presented to the Minister for Finance and the consultations carried out since, it is likely that the report will address nine key areas, with in the region of 40 recommendations in total.