ILCU Statement on Changes to Investment Regulations 2018

Media Release: 01 February 2018

The Irish League of Credit Unions (ILCU) today (February 1st 2018) notes the publication of the Central Bank of Ireland’s feedback statement onCP109 in respect of the Potential Changes to the Investment Framework for Credit Unions and the related 2018 Investment Regulations.
The authorised investment options for the management and placement of credit union surplus funds to date have been extremely limited. The ILCU has long campaigned for a review of these restrictive investment regulations. Today, the ILCU welcomes the Central Bank’s intention to introduce additional investment classes for credit unions, which will increase the current level of investment diversification.
In particular, the ILCU welcomes the amendment of the investment regulations to facilitate investment by credit unions in Approved Housing Bodies. This will allow credit unions to provide significant funding to support the development of critically needed social housing in this country. The ILCU has tirelessly campaigned for this change in the investment regulations. The remaining stumbling block is now the establishment of a financial vehicle as committed-to in Rebuilding Ireland, the Government’s Action Plan for Housing and Homelessness of July 2016. It is imperative that the establishment of this financial vehicle is prioritised by Government so that credit unions can start at last to invest in social housing.
The ILCU notes with disappointment the fact that the new regulations will severely restrict credit union investment in bank bonds. Bank bonds have been a key investment asset class for credit unions and an important source of investment return. The changes made in respect of this investment class are not proportionate and will continue to unfairly curtail credit unions’ investment scope. The ILCU notes that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in their Report on the Review of the Credit Union Sector (October 2017) stated that the regulatory requirements applicable to the credit union sector should be fit-for-purpose and proportionate in the context of the post economic-crisis period. 
Furthermore, the introduction of supranational bonds and corporate bonds as additional investment classes will only have a negligible impact on investment income. One of the main challenges for credit unions is the ability to generate an adequate investment return on members’ savings, and these additional classes and the restriction on bank bonds do very little to address this challenge. The ILCU will continue to pro-actively engage with the Central Bank and other stakeholders on behalf of our affiliated credit unions in respect of these significant concerns.

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