Proposals to strengthen the regulation of mutual societies and credit unions are being drawn-up and will be presented to the Northern Ireland Executive this winter, enterprise minister Arlene Foster has told the Belfast Telegraph. Recommendations could see the transfer of regulation away from her own department to the UK’s Financial Services Authority.
A report published last month by the Treasury considered what lessons should be drawn from the collapse of the Presbyterian Mutual Society. It also responded to proposals from the Northern Ireland Assembly’s enterprise committee for reforms to the legislative framework for credit unions, to enable them to offer a wider range of financial products, including individual savings accounts, child trust funds and insurance policies.
Arlene Foster says: “Following the publication of the Treasury Report, my department has established a team of officials to carry out a detailed scrutiny of the current Northern Ireland legislation governing both credit unions and industrial & provident societies, in order to identify the Northern Ireland legislative amendments that will be required to give effect to my policy objectives.
“This process is ongoing and will include discussions with HM Treasury to agree how the recommendations included in the review, which impact upon the Financial Services Authority, are to be taken forward. It is currently planned that I will be in a position to put detailed policy proposals to the Executive in the winter. Any subsequent legislation will, of course, be subject to Assembly approval in the normal way.”
Mark Durkan MP, who chaired the Assembly committee on credit unions, expressed disappointment at the slow speed of action. “The department has known that this issue has been coming and therefore I would have expected them to be able to comple the exercise very readily,” he says.
The Treasury’s report expressed apparent sympathy to investors in Presbyterian Mutual, saying “it seems clear …… that members had no idea their money was at risk… an impression that may have been underlined by the fact that the society offered financial products for which it should have sought authorisation”. It added that the FSA had decided not to prosecute those in charge of PMS “at this stage”.