The Central Bank of Ireland is proposing to change the fitness and probity regime for credit unions in relation to their core business only and does not propose to apply its changes to credit unions that are also authorised as retail intermediaries.

The Central Bank’s primary objective is to strengthen 'governance' on boards and among the managers of credit unions. The fitness and probity regime for credit unions was introduced on 1 August 2013. Since that time, the sector has undergone an enormous amount of restructuring and consolidation and its profile is now very different. Today, half of sector assets can be attributed to those credit unions with total assets of €100m (£88 million) or more. Many credit unions are struggling to survive because of a drop in demand for loan products, pressure on investment returns, increasing costs and a consequent drop in return on assets. The regulator performed a 'thematic review' of 16 unions last year and found many of their fitness regimes wanting.

The Central Bank proposes to prescribe an additional three "pre-approval controlled functions" or 'PCF roles' for credit unions. It wants to prescribe them initially in cases where the total assets of the credit union are at least €100 million. These 'PCF roles' are:

• Risk Management Officer (CUPCF-3);
• Head of Internal Audit (CUPCF-4); and
• Head of Finance (CUPCF-5).

The mooted deadline for this is April Fool's Day next year. 'Grandfathering' for incumbents is on the cards also.