Credit Union Act 1997 (Regulatory Requirements) Regulations 2016.
Statutory Instruments
Source: Statutory Instruments

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paragraphs: (1) These Regulations may be cited as the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016.
(2) These Regulations commence on 1 January 2016.
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paragraphs: (1) In these Regulations, unless the context otherwise requires:-
(a) sport and recreation;
(b) culture and heritage;
(c) the arts (within the meaning of the Arts Act 2003 );
(d) health of the community;
(e) youth, welfare and amenities; and
(f) natural environment;
(a) have a house constructed on the property as their principal residence;
(b) improve or renovate a house on the property that is already used as their principal residence,
(c) buy a house that is already constructed on the property for use as their principal residence, or
(d) refinance a loan previously provided for one of the purposes specified in (a), (b) or (c) for the same purpose;
(a) a member of the board of directors or the management team of a credit union;
(b) a member of the family of a member of the board of directors or the management team of a credit union; or
(c) a business in which a member of the board of directors or the management team of a credit union has a significant shareholding;
(2) A word or expression used in these Regulations and also used in the Act has, unless the contrary intention appears, the same meaning in these Regulations that it has in the Act.
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paragraphs: (1) A credit union shall ensure that all reserves held in accordance with, and for the purpose of, this Part and section 45 of the Act are:
(a) perpetual in nature;
(b) freely available to absorb losses;
(c) realised financial reserves that are:
(i) unrestricted; and
(ii) non-distributable.
(2) For the purpose of paragraph (1), any instrument classified or contributing to a reserve shall, in order to be eligible:
(a) not be secured or subject to a guarantee which enhances its seniority;
(b) be permanent and without an obligation for repayment of principal;
(c) have no preferential distribution rights;
(d) rank below all other claims in the event of a liquidation;
(e) qualify as a reserve for accounting purposes.
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paragraphs: (1) Subject to paragraph (2), a credit union shall establish and maintain a minimum regulatory reserve requirement of at least 10 per cent of the assets of the credit union.
(2) A newly registered credit union shall establish and maintain an initial reserve requirement that:
(a) is sufficient to meet the credit union’s anticipated growth over 3 years;
(b) takes account of operating losses that can be expected to occur until the credit union reaches an operationally viable performance level; and
(c) is at least equal to the greater of:
(i) €10,000;or
(ii) minimum regulatory reserve requirement specified in paragraph (1).
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paragraphs: (1) A credit union shall monitor its reserves on a continuous basis to ensure compliance with this Part and section 45 of the Act.
(2) Where a credit union fails, or is likely to fail, to comply with its reserve requirement in this Part or section 45 of the Act, the credit union shall notify the Bank in writing no later than close of business of the next business day.
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paragraphs: Where a credit union has complied with the requirements in this Part and section 45 of the Act, but has recorded a deficit in its annual accounts and is proposing to pay a dividend and/or a loan interest rebate, the credit union shall inform the Bank in writing at least 3 weeks before it gives notice of its Annual General Meeting, as required under section 80(3) of the Act.
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paragraphs: (1) In this Part “relevant liquid assets” means the following unencumbered assets only:-
(a) cash;
(b) investments with a maturity of less than 3 months, excluding the minimum reserve deposit account and the deposit protection account;
(c) investments with a maturity of 3 months or more, excluding the minimum reserve deposit and the deposit protection account, where a written guarantee exists to the effect that funds are available to the credit union in less than 3 months. For the purpose of paragraph (1), where a guarantee exists, the investments may be considered liquid assets to the value of the investments guaranteed, excluding penalties.
(2) In this Part “short term liquid assets” means the following unencumbered assets only:-
(a) cash;
(b) investments with a maturity of less than 8 days, excluding the minimum reserve deposit account and the deposit protection account;
(c) investments with a maturity of 8 days or more, excluding the minimum reserve deposit and the deposit protection account, where a written guarantee exists to the effect that funds are available to the credit union in less than 8 days. For the purpose of paragraph (2), where a guarantee exists, the investments may be considered short term liquid assets to the value of the investments guaranteed, excluding penalties.
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paragraphs: (1) A credit union shall establish and maintain a minimum liquidity ratio of relevant liquid assets of at least 20 per cent of its unattached savings.
(2) A credit union shall establish and maintain a minimum short term liquidity ratio of short term liquid assets of at least 5 per cent of its unattached savings.
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paragraphs: (1) A credit union shall monitor its liquidity ratios on a continuous basis to ensure compliance with the liquidity requirements in this Part and in the Act.
(2) Where a credit union is failing, or likely to fail to comply, with the liquidity requirements in this Part or in the Act, it shall notify the Bank in writing no later than close of business of the next business day.
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paragraphs: Where, at the commencement of these Regulations, a credit union is failing to comply with the requirement in Regulation 8(2), the credit union shall increase its holdings in short term liquid assets in order to bring the credit union’s short term liquidity ratio to at least 5 per cent not later than the first anniversary of the commencement of these Regulations or such later date as the Bank may permit.
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paragraphs: (1) A credit union shall only make loans that fall within the following categories:
(a) Personal loans;
(b) Commercial loans;
(c) Community loans;
(d) House Loans;
(e) Loans to other credit unions.
(2) A commercial loan granted by a credit union, where the total amount of commercial loans granted to a borrower, or group of borrowers who are connected, is less than €25,000, is not subject to Regulations 12(a) or 16. For the purposes of paragraph (2), a commercial loan is included in the calculation of commercial loans until the commercial loan has been repaid in full.
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paragraphs: A credit union shall not make:
(a) a commercial loan, where such a loan would cause the total amount of outstanding commercial loans of the credit union to exceed 50 per cent of the credit union’s regulatory reserve,
(b) a community loan, where such a loan would cause the total amount of outstanding community loans to exceed 25 per cent of the credit union’s regulatory reserve, or
(c) a loan to another credit union, where such a loan would cause the total amount of outstanding loans to other credit unions to exceed 12.5 per cent of the credit union’s regulatory reserve.
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paragraphs: (1) A credit union shall not make a loan to a borrower or a group of borrowers who are connected which would cause the credit union to have a total exposure to the borrower or group of borrowers who are connected of greater than €39,000 or 10 per cent of the regulatory reserve of the credit union.
(2) Where an exposure to a borrower or group of borrowers who are connected exceeds the limit set out in paragraph (1), the credit union must hold the amount of the exposure that is in excess of the limit in a realised reserve, separate from the regulatory reserve of the credit union.
(3) The requirement specified in paragraph (2) shall not apply to exposures existing at the time of the commencement of these Regulations, for a period of 2 years from the commencement of these Regulations.
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paragraphs: (1) A credit union shall not make a loan to a member:-
(a) for a period exceeding 5 years if, were the loan to be made, the total gross amount outstanding in relation to all loans with more than 5 years to the final repayment date would exceed—
(i)30 per cent of the total gross loan book balance outstanding at that time in relation to all loans made by the credit union, or
(ii) if the Bank so approves in writing, 40 per cent of the total gross loan book balance outstanding at that time in relation to all loans made by the credit union, or
(b) for a period exceeding 10 years if, were the loan to be made, the total gross amount outstanding in relation to all loans with more than 10 years to the final repayment date would exceed—
(i)10 per cent of the total gross loan book balance outstanding at that time in relation to all loans made by the credit union, or
(ii) if the Bank so approves in writing, 15 per cent of the total gross loan book balance outstanding at that time in relation to all loans made by the credit union.
(2) The Bank may impose on approval, for the purposes of subparagraph (a)(ii) or (b)(ii) of this Regulation, any condition that the Bank considers appropriate.
(3) A credit union shall not make a loan to a member for a period exceeding 25 years.
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paragraphs: A credit union shall only grant a house loan where it holds the first legal charge on the property in respect of which the loan is to be provided.
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paragraphs: (1) A credit union shall only grant a commercial loan, community loan or loan to another credit union where a comprehensive business plan and detailed financial projections (supported by evidence based assumptions), appropriate for the scale and complexity of the loan, are provided and in place before granting the relevant loan.
(2) A credit union shall report on the performance of loans, in writing, to the board of directors of the credit union on a monthly basis. For the purposes of paragraph (2), such a report shall include details on the performance of commercial loans, community loans and loans to other credit unions.
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paragraphs: (1) A credit union shall permit a member to repay a loan on any day that the credit union is open for business (including opening hours of branch or otherwise available for business).
(2) A credit union shall establish and maintain the matters specified below in writing:
(a) limits in respect of credit concentration and loan portfolio diversification including the maximum amount of commercial lending, community lending and lending to other credit unions; and
(b) processes which the credit union will follow in relation to arrears management and rescheduling.
(3) A credit union shall ensure that its credit assessment process is based on coherent and clearly defined criteria and that the process of approving loans and amending loans is clearly established and documented in its credit policy.
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paragraphs: (1) A credit union shall not make a loan to a related party which would provide that party with more favourable terms than a loan by the credit union to non-related parties (including, without limitation, terms as to credit assessment, duration, interest rates, amortisation schedules, collateral requirements).
(2) A credit union shall not manage a loan to a related party on more favourable terms than a loan by the credit union to non-related parties (including but not limited to varying the terms of a loan, permitting rescheduling, interest roll-up, granting a grace period for payment, loan write-off in whole or in part, provisioning against a loan, decisions to take or not to take enforcement action).
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paragraphs: (1) Subject to Regulation 18, a credit union shall ensure that the making of a loan to a related party is subject to individual prior approval in writing by the credit committee and that actions in relation to the management of a loan are subject to individual prior approval in writing by the credit committee or the credit control committee of the credit union as appropriate.
(2) A credit union shall exclude individuals on the credit committee or the credit control committee with conflicts of interest in relation to matters specified in paragraph (1).
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paragraphs: (1) Regulations 19 and 21 do not apply where the total credit union exposure to the related party is not greater than €2,000.
(2) In relation to exempt exposures referred to in paragraph (1), a credit union shall ensure that:-
(a) the credit union monitors these loans to ensure that the limit imposed is not exceeded;
(b) a register of these loans recording how it has complied with this requirement is maintained by the credit union; and
(c) a report on these loans is reviewed and approved by the board of directors of the credit union on a quarterly basis.
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paragraphs: (1) A credit union shall record and monitor loans made to related parties and report, in writing, to the board of directors on related party loans on a monthly basis. Such a report shall include details of loans advanced to related parties during the month, total loans outstanding to related parties, the performance of loans to related parties and actions in respect of the management of loans to related parties.
(2) A credit union shall ensure that the internal audit function assesses, at least annually, the compliance or otherwise by a credit union with Regulation 19 and paragraph (1) of this Regulation and, after each assessment, submit a written report to the board of directors indicating their findings and conclusions and, where appropriate, making recommendations on any changes required.
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paragraphs: A credit union shall include the process in relation to lending to a related party in its Credit Policy.
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paragraphs: A credit union shall, at a minimum, establish and maintain the following written lending policies:-
(a) Credit Policy;
(b) Credit Control Policy; and
(c) Provisioning Policy.
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paragraphs: (1) Nothing in these Regulations shall render unlawful any loan made in accordance with or under the Act to a member before the commencement of these Regulations.
(2) Where, at the commencement of these Regulations, a credit union is failing to comply with the requirements in this Part, that credit union shall only make a loan where the making of such a loan would not cause the credit union to either fail to comply or exacerbate a failure to comply with any of the requirements in this Part.
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paragraphs: (1) A credit union may only invest in euro denominated investments in the following:
(a) Irish and EEA State Securities;
(b) accounts in credit institutions;
(c) bank bonds;
(d) collective investment schemes;
(e) shares of and deposits with other credit unions;
(f) shares of a society registered under the Industrial and Provident Societies Act 1893 to 1978.
(2) The Bank may prescribe from time to time, in accordance with section 43 of the Act, further classes of investments in which a credit union may invest its funds which may include investments in projects of a public nature. Investments in projects of a public nature include, but are not limited to, investments in social housing projects.
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paragraphs: A credit union shall not make an investment with a counterparty which, were that investment to be made, would cause the investments with that counterparty to exceed 25 per cent of the credit union’s total value of investments.
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paragraphs: (1) A credit union shall not make an investment in Irish and EEA State securities which would cause the investments in Irish and EEA State securities to exceed 70 per cent of the total value of the credit union’s investments.
(2) A credit union shall not make an investment in bank bonds which would cause the investments in bank bonds to exceed 70 per cent of the total value of the credit union’s investments.
(3) A credit union shall not make an investment in another credit union which would cause the investments in other credit unions to exceed 12.5 per cent of its regulatory reserve.
(4) A credit union shall not make an investment in the shares of a society registered under the Industrial and Provident Societies Acts 1893 to 1978 which would cause the investments in shares in societies registered under the Industrial and Provident Societies Acts 1893 to 1978 to exceed 12.5 per cent of the credit union’s regulatory reserve.
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paragraphs: (1) A credit union shall not make an investment which has a maturity date which exceeds 10 years from the date of the investment.
(2) A credit union shall not make an investment which would cause the credit union to have more than 30 per cent of its investments maturing after 7 years.
(3) A credit union shall not make an investment which would cause the credit union to have more than 50 per cent of its investments maturing after 5 years.
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paragraphs: A credit union may invest in collective investment schemes only where the underlying investments of the scheme are:—
(a) composed entirely of instruments specified in Regulation 25(1)(a), (b) and (c); and
(b) the making of such an investment would not cause a credit union to fail to comply with this Part.
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paragraphs: A credit union shall ensure that any investments made remain in compliance with the investment requirements in this Part.
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paragraphs: A credit union shall not distribute from its annual operating surplus investment income or an investment gain to members or transfer investment income or an investment gain to a reserve set aside to provide for dividends, unless the investment income or investment gain falls within the following:
(a) investment income or an investment gain received by the credit union at the balance sheet date;
(b) investment income that will be received by the credit union within 12 months of the balance sheet date.
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paragraphs: A credit union shall establish and maintain a written strategy having regard to section 43 of the Act to manage concentration risk which can result from dealing with a single counterparty or holding investments with similar characteristics like maturities and to ensure investments remain within the limits contained in these Regulations.
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paragraphs: (1) Where, at the commencement of these Regulations, a credit union has investments made in accordance with or under the Act which exceed the requirements in this Part, the credit union shall (subject to paragraph (2)):
(a) reduce those investments in order to ensure compliance with this Part;
(i) as soon as possible without incurring a loss; and
(ii) in any event not later than the second anniversary of the commencement of these Regulations or such later date as the Bank may permit, and
(b) shall only make an investment where the making of such an investment would not cause the credit union to either fail to comply or exacerbate a failure to comply with any of the requirements in this Part.
(2) A credit union may hold to maturity all fixed term investments held by that credit union on the commencement of these Regulations.
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paragraphs: The aggregate liabilities of a credit union in respect of deposits shall not at any time exceed 100 per cent of aggregate liabilities in respect of shares issued to members.
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paragraphs: Subject to Regulation 36 and 37, a credit union shall ensure that no member shall have total savings which exceed €100,000.
36. (1)(a) Subject to paragraph (2), where, on the commencement of these Regulations, a member has total savings with a credit union in excess of €100,000 the credit union shall repay to such members those savings in excess of €100,000.
(b) For the purpose of subparagraph (a), the repayment shall occur as soon as possible and in any event within 12 months of the commencement of these Regulations or such other date that the Bank may permit.
(2)(a) Where, on the commencement of these Regulations, a member has total savings with a credit union in excess of €100,000 the credit union may apply to the Bank for approval to continue to hold (but not increase) such savings.
(b) For the purpose of subparagraph (a), an application shall be submitted in writing to the Bank and contain such information as the Bank may specify from time to time.
(c) The Bank may grant approval for an application received under subparagraph (a) where the credit union has demonstrated and the Bank is satisfied that the granting of such approval is:
(i) consistent with the adequate protection of the savings of members; and
(ii) effective and proportionate, having regard to the nature, scale and complexity of the credit union.
(d) For the purpose of subparagraph (c) the Bank shall consider the following:
(i) the total realised reserve position of the credit union;
(ii) the asset size of the credit union, by reference to its total assets; and
(iii) such other matters that the Bank may specify from time to time.
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paragraphs: (1) A credit union may apply to the Bank for approval to increase individual member total savings in excess of €100,000.
(2) For the purpose of paragraph (1), an application shall be submitted in writing to the Bank and contain such information as the Bank may specify from time to time.
(3) The Bank may grant approval for an application received under paragraph (1) where the credit union has a minimum total asset size of €100,000,000 and has demonstrated and the Bank is satisfied that the granting of such approval is:
(a) consistent with the adequate protection of the savings of members; and
(b) effective and proportionate, having regard to the nature, scale and complexity of the credit union.
(4) For the purpose of paragraph (3) the Bank shall consider the following:
(a) the total realised reserve position of the credit union; and
(b) such other matters that the Bank may specify from time to time.
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paragraphs: (1) Where the Bank grants an approval under Regulation 36 or 37, it may, at that time or at any other time, subject such approval to conditions with which the credit union shall comply.
(2) Where a credit union fails to comply with a condition imposed pursuant to paragraph (1), the credit union shall notify the Bank as soon as possible and thereafter repay to such members those savings in excess of €100,000.
(3) For the purpose of paragraph (2), the repayment shall occur as soon as possible and in any event within 12 months after the credit union has notified the Bank, or the Bank otherwise becomes aware, of the matters specified in paragraph (2) or such date as the Bank may permit or require.
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paragraphs: In this Part the word “borrow” or any word which is a variant, derivative or translation of, or is analogous to that word shall not include the issue of shares, or the acceptance of deposits from members of the credit union in accordance with the Act.
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paragraphs: A credit union may borrow money, on security or otherwise, so long as the total amount outstanding in respect of monies so borrowed does not at any time exceed 25 per cent of the total savings of the credit union.
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paragraphs: Where a credit union proposes to borrow in accordance with Regulation 40, the credit union shall provide at least 28 days’ notice in writing to the Bank of its intention to undertake the proposed borrowing.
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paragraphs: For the purposes of Regulation 40, when calculating the total amount outstanding in respect of moneys borrowed by a credit union at any time, an overdraft received from its banker shall be disregarded.
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paragraphs: A credit union shall establish and maintain a written policy in relation to borrowing. The board of directors of the credit union shall, at least annually, review, update and approve this policy.
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paragraphs: Where, at the commencement of these Regulations, a credit union has borrowings made in accordance with or under the Act which exceed the requirements in this Part, the credit union shall:
(a) reduce those borrowings in order to ensure compliance with this Part;
(i) as soon as possible without incurring a loss; and
(ii) in any event not later than the second anniversary of the commencement of these Regulations or such later date as the Bank may permit, and
(b) only borrow where such borrowing would not cause the credit union to either fail to comply or exacerbate a failure to comply with any of the requirements in this Part.
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paragraphs: (1) A credit union shall establish and maintain a written risk register, maintained by a risk management officer, that documents the risks that the credit union is, or may be, exposed to and the systems and controls that the credit union has established to manage and mitigate those risks.
(2) A credit union shall ensure that the board of directors of the credit union review and approve the risk register, at least annually, to ensure that the risks that the credit union is, or may be, exposed to are contained on the risk register and that the systems and controls are appropriate to manage and mitigate these risks.
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paragraphs: (1) A credit union shall establish and maintain, in writing, all policies specified in section 55(1)(o) of the Act.
(2) A credit union shall ensure that the matters specified below shall be communicated to all officers in the credit union following any updates made, including the review, approval and update by the board of directors required at least annually of:
(a) the risk management policy;
(b) the business continuity plan;
(c) the conflicts of interest policy; and
(d) the standards of conduct and ethical behaviour of officers.