Services to Members
The Credit Union Act, 1997 (“the 1997 Act”) and Schedule 2 of the Credit Union act 1997 (Regulatory Requirements) Regulations 2016 (“the 2016 Regulations”) set out the services that a credit union may provide to its members without requiring an additional services approval from the Central Bank.
Relevant Legislation:
Additional Services
Where a credit union wishes to provide services to its members, in addition to those referred to above, that are of mutual benefit to its members and do not impose undue risk to members’ savings, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48-52 of the 1997 Act.
The Central Bank is, in principle, supportive of credit unions developing additional services. The Central Bank will consider proposals from credit unions on new additional services they wish to provide to members where the credit unions can demonstrate that:
- The proposed additional service is supported by a robust business case
- The proposed additional service is not contrary to financial services legislation
- The board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved
- Systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.
Where a credit union is considering developing additional services, early engagement with the Central Bank in relation to such proposals is advisable before embarking on the detailed development of any additional services proposal.
Central Bank approval for the provision of additional services:
Before a credit union can provide additional services, it must ensure that it complies with the legislative provisions set out in sections 48-52 of the 1997 Act. This includes obtaining the approval of the Central Bank for the provision of the additional service. A summary of the process is set out below:
- Contact credit union supervisor:
As set out above, early engagement with your credit union supervisor in the Registry of Credit Unions in relation to the proposed provision of an additional service is encouraged. This engagement may include the submission of a proposal in relation to the provision of the service.
- Obtain a Preliminary View from the Central Bank:
1. Where the Registry of Credit Unions has indicated that the Central Bank would consider an application for a preliminary view in relation to the proposal to provide the additional service, then, as required under section 48 of the 1997 Act, the credit union should obtain a preliminary view from the Central Bank in relation to that proposal.
The following is a Sample Preliminary View Application - Sample Preliminary View Application Form. The Central Bank will, on request, provide an appropriate Preliminary View Application form relevant to the service being applied for. For details in relation to the preliminary view application process, credit unions should their credit union supervisor in the Registry of Credit Unions.
2. On receipt of an application seeking preliminary approval, the Central Bank will review the information provided and will then give a preliminary view as to whether and to what extent the provision of the service would be likely to be approved. However, this preliminary view shall not prejudice the final approval decision.
- Approval by the credit union of the provision of the proposed additional service:
Once a positive preliminary view has been received from the Central Bank, the credit union must adopt a decision to provide the proposed service to its members. The credit union can proceed with giving notice of the resolution for the proposed service to its members in accordance with the rules of the credit union. Such a resolution may be passed in any of the following ways:
a) by AGM; or
b) by SGM; or
c) by a resolution of the board of directors of the credit union.
Once the resolution has been passed at the AGM / SGM or by the board of directors of the credit union, the credit union may proceed with obtaining formal approval from the Central Bank in accordance with section 49 of the 1997 Act.
- Amendment to standard rules of a credit union:
In accordance with section 48(4)(c) of the 1997 Act, the standard rules of a credit union must be amended to reflect the provision of the additional service. Section 14 of the 1997 Act provides that the rules of a credit union can be amended only by way of a resolution passed by not less than two-thirds of the members of the credit union present and voting at an AGM or at an SGM called for the purpose of considering a resolution proposing an amendment of the rules. Where the proposal to provide the proposed additional service has been approved by way of board resolution, the credit union will be required to approve the rule amendment at its next AGM and, once approved, submit the rule change to the Central Bank for registration.
- Obtain Formal Approval from the Central Bank:
Having obtained a positive preliminary view from the Central Bank, a credit union must submit a formal application for additional services approval to the Central Bank. As set out in section 49(2) of the 1997 Act, an approval application should include information about the following:
a) the protection of members for whom the services are to be provided from conflicts of interest that might otherwise arise in connection with the provision of the services;
b) the provision proposed for securing that adequate compensation is available to those members in respect of negligence, fraud or other dishonesty on the part of officers of the credit union in connection with the provision of the services;
c) the extent to which and the manner in which the provision of the services will require the involvement of persons with particular qualifications or experience;
d) the cost of providing the services;
e) the income expected to accrue form any changes made for the services; and
f) the credit union's proposed principal, in a case where the approval application relates to the provision of services by the credit union as agent for another;
and, where an approval application relates to the provision of additional services of more than one description, the information referred to above shall be given separately in respect of each description of services.
Where formal approval is granted, the credit union must comply with any conditions imposed on the approval by the Central Bank under section 49(7) of the 1997 Act, the requirements set out in sections 48-52 of the 1997 Act and any other legal and regulatory requirements.
- Cessation of Additional Service/Change of Regulated Financial Service Provider:
Where a credit union ceases to provide an additional service to its members, it should notify the Central Bank of the cessation of that service.
Where a credit union is providing additional services whereby the credit union is introducing its members to another regulated financial service provider, the credit union should notify the Central Bank in advance where it proposes to change the regulated financial service provider.
Member Personal Current Account Service (MPCAS)
As part of a tailored additional services application process, the Central Bank has described a suite of additional services known as a Member Personal Current Account Service (MPCAS).
This represents an example of an additional service that has been approved by the Central Bank and it is open to credit unions to apply for similar approval for this service. This does not preclude a credit union from making an application for approval of any other additional service in accordance with sections 48-52 of the 1997 Act.
Notice of Proposal The Central Bank proposes the inclusion of current account services as a new exempt service in Schedule 2 of the 2016 Regulations. This proposal arises from the Central Bank’s review of credit union exempt services and the January 2022 Consultation on Credit Union Exempt Services – Consultation Paper 148 (CP148). If current account services are included as a new exempt service, it would be the Central Bank’s intention that MPCAS (to include Member Business Current Account Services) as an additional service would be replaced with the proposed exempt service of current account services. The Central Bank wrote to all credit unions which had been granted approval to provide MPCAS as an additional service by letter dated 25 January 2024 with further information in relation to this proposal.
MPCAS Additional Service approval process
An additional services application process to provide MPCAS encompasses the three stages set out below.
Please refer to the MPCAS Application Form and the MPCAS Application Process guidelines.
Stage 1 - Eligibility Assessment
- Consideration of existing PRISM risk profile and progress on risk mitigation plan (where applicable)
- Response: 'minded to' or 'not minded to' consider a formal application at this time
Stage 2 - Application Assessment
- Impact of MPCAS on the credit unions risk profile
- Request for and assessment of additional information (if required)
- Issue 'minded to approve' letter, or
- Issue 'minded not to approve' letter setting out reasons why
Stage 3 - Application Approval
- Subject to satisfactory response to the 'minded to approve' letter
- Issue a Grant of Approval letter, conditions and requirements to the credit union
A credit union should be mindful that any grant of approval for an additional service requires its ongoing compliance with the conditions and requirements of approval and the Central Bank may amend its grant of approval or revoke its approval.
Member Business Current Account Services (MBCAS)
Following engagement with sector stakeholders and MPCAS-approved credit unions, on 27 September 2023, the Central Bank varied relevant credit unions’ MPCAS approvals to also allow those credit unions, where they so choose, to provide MPCAS-equivalent services to members who are a micro, small or medium-sized enterprise, charity, club or society, subject to conditions. This was done by including a new condition of approval – Condition 18.
Member Personal Current Account Services and Member Business Current Account Services – Notification and Attestation Processes
An MPCAS-approved credit union must comply with, among others, Conditions 1 and 2 relating to the provision of a confirmation (or “attestation”) and notification to the Central Bank, as follows:
- Condition 1: The Credit Union must confirm to the Central Bank’s satisfaction that it has met/fulfilled/implemented the Central Bank’s “MPCAS Risk Management Expectations” in the provision of MPCAS, as communicated to the Credit Union by the Central Bank.
- Condition 2: The Credit Union must notify the Central Bank in writing of its operational readiness to provide MPCAS at least one month before it intends making such services available to its Members.
In order to provide MBCAS, an MPCAS-approved credit union must comply with, among others, Conditions 18relating to the provision of a notification and confirmations to the Central Bank:
- The Credit Union must notify the Central Bank in writing of its operational readiness to provide MBCAS at least one month before it intends making such services available to its members via an “MBCAS Notification Form” as published by the Central Bank on its website. This notification can be made at the same time as the notification in respect of condition 2 of the Credit Union’s approval for Member Personal Current Account Services or later, where relevant.
- Condition 1 of the Credit Union’s approval for Member Personal Current Account Services shall not apply in respect of the provision of MBCAS. At the same time as the Credit Union notifies the Central Bank in accordance with [the above condition], the Credit Union must provide the confirmations set out in the “MBCAS Notification Form” referenced in [the above condition].
The Central Bank has published a guide – MPCAS and MBCAS Notification and Attestation Processes - for credit unions approved to provide MPCAS as additional services under section 49(3) of the Credit Union Act, 1997 (the 1997 Act) who in accordance with their MPCAS conditions of approval wish to provide the following to the Central Bank:
- Confirmation (attestation) that the credit union has met/fulfilled/implemented the Central Bank’s “MPCAS Risk Management Expectations” (the “MPCAS Questionnaire") and a notification of its operational readiness to provide MPCAS in accordance with Conditions 1 and 2 of the MPCAS conditions of approval; and / or
- Relevant confirmations regarding the credit union’s provision of MBCAS as set out in the “MBCAS Notification Form and notification of its operational readiness to provide MBCAS in accordance with Conditions 18(iv) and (v) of the MPCAS conditions of approval.