Credit Union and Co-operation with Overseas Regulators Act 2012

PART 1 Preliminary and General

1. Short title, construction and collective citation.

1.— (1) This Act may be cited as the Credit Union and Co-operation with Overseas Regulators Act 2012.

(2) The Credit Union Acts 1997 and 2001 and this Act (other than sections 36, 37, 48(2) and 56(3), Part 5 and Schedules 2 to 5) may be cited together as the Credit Union Acts 1997 to 2012 and shall be construed together.

(3) The Central Bank Acts 1942 to 2011, sections 36, 37, 48(2) and 56(3), Part 5 (in so far as it amends any of those Acts), and Schedules 2 and 3 (in so far as they amend any of those Acts) may be cited together as the Central Bank Acts 1942 to 2012.

2. Commencement.

2.— (1) This Act comes into operation on such day or days as the Minister may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or provisions.

(2) Notwithstanding the commencement of the Principal Act, the provisions of section 3(2) of the Principal Act relating to an order under section 1(2) of that Act apply to an order made under this section.

3. Definition.

3.— In this Act “Principal Act” means the Credit Union Act 1997.

4. Savers for regulatory actions of Bank.

4.— (1) A regulatory action taken by the Bank under a provision being amended, repealed or revoked by this Act on or before the commencement of such amendment, repeal or revocation, continues to have effect according to its terms. The Bank may enforce such a regulatory action.

(2) Notwithstanding anything in the rules of a credit union, the board of directors may, by resolution passed during the transitional period, make such amendments of the rules of the credit union as may be consequential on the provisions of this Act.

(3) For the purposes of subsection (2), the transitional period is the period of one year from the commencement of this section.

(4) Notwithstanding anything in section 14(4) of the Principal Act, after the expiry of one year from the commencement of this section, the Bank shall not be required to register any amendment of a credit union’s rules unless such consequential amendments of the registered rules as are mentioned in subsection (2) either—

(a) have been made before the Bank receives the amendment; or

(b) are to be effected by the amendment.

(5) In subsection (1) “regulatory action” includes any direction, order, requirement, sanction, condition, appointment or request (however described) of a regulatory nature made, given or imposed by the Bank.

5. Expenses.

5.— The expenses incurred by the Minister in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Public Expenditure and Reform, be paid out of moneys provided by the Oireachtas.

PART 2 Amendments to Credit Union Act 1997 and Consequential Amendments, etc.

6. Amendment of section 2 (Interpretation) of Principal Act.

6.— The Principal Act is amended by substituting the following for subsection (1) of section 2:

“(1) In the Credit Union Acts 1997 to 2012—

‘Act of 1966’ means the Credit Union Act 1966;

‘Advisory Committee’ means the committee established under section 180;

‘amendment’, in relation to the rules of a credit union, includes a new rule, and a resolution rescinding a rule, of the credit union;

‘annual accounts’ has the meaning given by section 111(6);

‘annual general meeting’ has the meaning given by section 78(1);

‘annual return’ means the annual return which a credit union is required by section 124 to send to the Bank;

‘Bank’ means the Central Bank of Ireland;

‘board of directors’ means the body which has general control, direction and management of a credit union and to which section 53 relates;

‘board oversight committee’ has the meaning given by section 76L;

‘books and documents’ includes accounts and records made in any manner, and ‘books or documents’ shall be construed accordingly;

‘business continuity’ and ‘business continuity plan’ have the meanings given to them, respectively, by section 76I;

‘chair’ has the meaning given by section 55A(2);

‘civil partner’ has the same meaning as it has in the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010;

‘cohabitant’ has the same meaning as it has in the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010;

‘common bond’ means a common bond falling within section 6(3);

‘compliance officer’ has the meaning given by section 76D;

‘contravention’ includes failure to comply;

‘Court’ means the High Court;

‘credit institution’ means—

(a) a recognised bank within the meaning of the Central Bank Acts 1942 to 2011,

(b) a trustee savings bank,

(c) the Post Office Savings Bank, or

(d) a building society within the meaning of the Building Societies Act 1989;

‘credit union’ means a society registered as such under this Act, including a society deemed to be so registered by virtue of section 5(3);

‘debentures’ means any debentures, debenture stock or bonds of a credit union, whether constituting a charge on the assets of the credit union or not;

‘financial services legislation’, where applicable to credit unions acting under any authorisation from the Bank provided for by law, means—

(a) the designated enactments within the meaning of section 2 of the Central Bank Act 1942,

(b) the designated statutory instruments within the meaning of section 2 of the Central Bank Act 1942, and

(c) the Central Bank Acts 1942 to 2011 together with the statutory instruments made under those Acts;

‘general meeting’ means an annual general meeting or a special general meeting;

‘internal audit charter’ has the meaning given by section 76K(2);

‘internal audit function’ has the meaning given by section 76K(1);

‘internal audit plan’ has the meaning given by section 76K(3);

‘manager’, in relation to a credit union, means the individual appointed to the role of manager of the credit union under section 63A;

‘management team’ has the meaning given by section 55(1)(i);

‘meeting’, includes, where the registered rules of a credit union so allow, a meeting of delegates appointed by members;

‘member of the family’, in relation to any person, means that person’s father, mother, grandfather, grandmother, father-in-law, mother-in-law, spouse or civil partner, cohabitant, son, daughter, grandson, granddaughter, brother, sister, half-brother, half-sister, uncle, aunt, nephew, niece, first cousin, step-son, step-daughter, step-brother, step-sister, son-in-law, daughter-in-law, brother-in-law or sister-in-law;

‘Minister’ means the Minister for Finance;

‘nomination committee’ has the meaning given by section 56B(1);

‘non-qualifying member’, in relation to a credit union, has the meaning given by section 17(4);

‘officer’, in relation to a credit union, includes—

(a) the chair, the secretary or any other member of the board of directors, a member of a principal Committee, a member of the board oversight committee, risk management officer, compliance officer, credit officer or credit control officer of the credit union,

(b) an employee of the credit union to whom paragraph (a) does not apply, and

(c) a voluntary assistant of the credit union,

but does not include an auditor appointed by the credit union in accordance with the requirements of this Act;

‘operational risk’ has the meaning given by section 76E(1);

‘organisation meeting’ has the meaning given by section 77(1);

‘pass book’ includes any type of written statement of account;

‘persons claiming through a member’ includes the executors or administrators and assignees of a member and, where nomination is allowed, the member’s nominee;

‘prescribe’ means—

(a) in relation to the Minister, prescribed by regulations made by the Minister under section 182, and

(b) in relation to the Bank, prescribed by regulations made by the Bank under section 182A;

‘principal Committee’, in relation to a credit union, means a credit committee, credit control committee or membership committee;

‘register’ means the register maintained under section 8(5);

‘registered’ means for the time being entered in the register and ‘registration’ shall be construed accordingly;

‘regulatory directions’ has the meaning given by section 87(3);

‘restructuring proposal’ has the meaning given by section 45 (1)of the Credit Union and Co-operation with Overseas Regulators Act 2012;

‘risk management officer’ has the meaning given by section 76C(1);

‘risk management system’ has the meaning given by section 76B(1);

‘savings’, in relation to a credit union, has the meaning given by section 27(1);

‘share’, in relation to a credit union, means each sum of one euro standing to the credit of a member of that credit union in respect of shares in the register of members required by this Act to be kept by that credit union;

‘special general meeting’ shall be construed in accordance with section 79;

‘special resolution’ means a resolution which is passed by a majority of not less than three quarters of such members of a credit union present and voting and who are for the time being entitled to vote in person at any general meeting of which notice, specifying the intention to propose the resolution, has been duly given according to the rules of the credit union;

‘strategic objectives’ has the meaning given by section 76A(1);

‘strategic plan’ has the meaning given by section 76A(1);

‘voluntary assistant’, in relation to a credit union, means a member of the credit union who, although not a remunerated employee of the credit union, is engaged in any way in the operation of the credit union.”.

7. Supplemental provisions relating to registration, etc., under section 6 of Principal Act.

7.— The Principal Act is amended by inserting the following section after section 6:

“6A.— (1) The Bank may impose such conditions, if any, as the Bank considers to be necessary to protect, with effect from registration under this Part, the interests of the members of the society seeking registration and any such conditions shall be a condition for registration as a credit union.

(2) The conditions imposed by the Bank under subsection (1) may include requiring a credit union—

(a) to notify the Bank of any events of such significance that could materially affect the credit union including any change to the strategic plan of the credit union;

(b) to operate a more limited business model agreed with the Bank;

(c) to cause to be undertaken an independent review of the credit union’s business within 12 months in order to ensure that the credit union is complying with all legal and regulatory requirements.

(3) Any of the conditions of registration may be amended or revoked by the Bank if, in the opinion of the Bank—

(a) the amendment or revocation is necessary to protect the interests of the credit union’s members, or

(b) the conditions concerned have become spent orobsolete and should be revoked.

(4) Whenever the Bank proposes to impose a condition in relation to a registration or to amend the conditions of a registration—

(a) it shall notify in writing the society seeking registration under this Part or the credit union concerned, as the case may be—

(i) that it intends to impose one or more than one condition in relation to the registration or to amend the existing conditions of the registration imposed under this section, as the case may be, and of its reasons for so doing, and

(ii) that the society or credit union concerned, as the case may be, may, within 15 working days after the date of the giving of the notification, make representations in writing to the Bank in relation to the imposition or amendment, as the case may be, and shall specify in the notification, the condition or the amendment, as the case may be,

and

(b) the society or credit union concerned, as the case may be, may make such representations to the Bank within the time referred to in paragraph (a)(ii).

(5) Before deciding to impose conditions of registration, or an amendment of conditions of the registration, under this section, as the case may be, the Bank shall consider any representations duly made to it under subsection (4)(b) and, after so considering, the Bank may—

(a) decide to impose the conditions of registration, or the amendment of the conditions of the registration, under this section, as the case may be,

(b) decide to impose the conditions or amend the conditions of the registration under this section, as the case may be, that differ from those specified in the notification concerned, but only if the difference results in the conditions concerned being no more onerous than would be the case had the Bank decided to impose the conditions or amend the conditions of the registration, as the case may be, in accordance with the notification concerned, or

(c) without prejudice to subsections (1) to (3), decide not to impose the conditions or not to amend the conditions of the registration.”.

8. Savings.

8.— The Principal Act is amended by substituting the following for section 27:

“27.— (1) A credit union may raise funds to be used for its objects—

(a) by the issue to its members of shares in the credit union (which may be withdrawable or non-withdrawable), and

(b) by the acceptance of money on deposit from a member,

and the cumulative amount of such shares in, and money on deposit (if any) with, the credit union is referred to in this Act as ‘savings’.

(2) For the adequate protection of the savings of members of credit unions the Bank may prescribe requirements and limits for savings, including—

(a) the maximum amount of savings (expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount) or category of savings a credit union member may hold,

(b) the ratio of total deposits from members that may be held by a credit union to total shares issued to members, and

(c) any other requirement or limit which the Bank considers necessary to prescribe.

(3) In prescribing matters for the purposes of this section, the Bank shall have regard to the need to ensure that the requirements imposed by the regulations made by it are effective and proportionate having regard to the nature, scale and complexity of credit unions, or the category or categories of credit unions, to which the regulations will apply.”.

9. Protection of members’ savings.

9.— The Principal Act is amended by inserting the following after section 27 (inserted by section 8):

“27A.— (1) In addition to its reporting functions under the Credit Union Acts 1997 to 2012and complying with any matter prescribed under those Acts, a credit union shall maintain appropriate oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements to ensure the protection of members’ savings and that it complies with requirements imposed under the financial services legislation.

(2) Without prejudice to the generality of subsection (1), the Bank may make regulations prescribing—

(a) certain oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements which the credit union is required to maintain where the Bank considers this is appropriate in the interest of protecting members’ savings or otherwise appropriate to ensure compliance with the requirements imposed under financial services legislation;

(b) requirements in relation to the oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements required to be maintained under this section.”.

10. Borrowing.

10.— The Principal Act is amended by substituting the following for section 33:

“33.— (1) For the purpose of its objects as referred to in section 6 a credit union may borrow money, on security or otherwise, and may issue debentures accordingly.

(2) For the adequate protection of the savings of members of credit unions, the Bank may prescribe—

(a) the maximum amount of money a credit union may borrow at any one time which may be expressed as a percentage of the aggregate of shares balance and the deposits balance of the credit union, and

(b) the notice to be given to the Bank by a credit union in specified circumstances where the credit union proposes to borrow certain amounts of money (expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount) in respect of those circumstances.

(3) Where the Bank considers it is necessary in the interests of the proper regulation of a credit union or credit unions generally, or the protection of members’ savings, it may do either or both of the following:

(a) permit a credit union to borrow moneys in excess of the amount prescribed in accordance with subsection (2);

(b) waive any notice requirement prescribed in accordance with subsection (2).

(4) A person dealing with a credit union shall not be obliged to be satisfied or to enquire into whether the limit imposed on the credit union by virtue of subsection (2) (or such limit as may be duly affected under subsection (3)) has been or is being observed; but if a person who lends money to a credit union or takes security in connection with such a loan has, at the time the loan is made or the security is taken, actual notice of the fact that that limit has been or is thereby exceeded, the credit union’s debt or, as the case may be, the security shall be unenforceable.

(5) Subject to subsection (4), a transaction with a credit union shall not be invalid or ineffectual by reason of the fact that the limit on borrowing prescribed by the Bank under subsection (2) (or such limit as may be duly affected under subsection (3)) has been or is by the transaction exceeded.

(6) In prescribing matters for the purposes of this section, the Bank shall have regard to the need to ensure that the requirements imposed by the regulations made by it are effective and proportionate having regard to the nature, scale and complexity of credit unions, or the category or categories of credit unions, to which the regulations will apply.”.

11. Lending.

11.— (1) The Principal Act is amended by substituting the following for section 35: