New Fitness and Probity Requirements for Credit Unions

The Central Bank Reform Act 2010 introduced Fitness and Probity Requirements for Credit Unions for the first time. These requirements are in place since 2013 and required credit unions to appoint 2 Pre-Approved Controlled Functions (PCF) positions being:

  1.  The Chairperson of the Board
  2.  The CEO or manager of the Credit Union

In 2018 the regulations were amended to introduce 3 additional PCF roles for Credit Unions with assets greater than €100m being:

  1.  The Head of Finance
  2.  The Head of Internal Audit
  3.  The Head of Risk

Now with effect from 1 October 2024, the existing regulations will be revoked to be replaced by the Fitness and Probity 2023 (Amendment) Regulations for Credit Unions.

What does this mean?

The new regulations are linked to the application of the Minimum Competency Code (MCC) and will apply for all activities provided by Credit Unions which are in scope under the MCC.

The regulations introduce 6 new PCF roles as follows:

  • Giving of advice to a member of a credit union, in the course of providing, or in relation to the provision of, the financial service (CUCF-3);
  • Arranging, or offering to arrange, a financial service for a member of a credit union (CUCF-4);
  • Assisting a member of a credit union in the making of a claim under a contract of insurance or reinsurance (CUCF-5);
  • Determining the outcome of a claim arising under a contract of insurance or reinsurance (CUCF-6);
  • Acting in the direct management or supervision of those persons who act for a credit union in providing the services referred to in subparagraphs (a) to (d) (CUCF-7); or
  • Adjudicating on any complaint communicated to a credit union by a member in relation to the provision of a financial service (CUCF-8).

Previously these PCF roles would have only been applicable to credit unions which were also authorised as retail intermediaries. However, since the publication and implementation of CP147 on MCC and its application to credit unions, the above services now fall under Core Services offered by Credit Unions.

How does this impact Credit Unions?

The new amendments capture the provision of financial services from start to finish. Where an employee of a credit union undertakes the following tasks:

  • Give advice on financial services
  • Arrange the financial product for a member
  • Assist a member in making a claim on insurance
  • Determine the outcome of an insurance claim
  • Act in direct supervision of those who carry out the duties set out in 1-4
  • Adjudicating on any complaint communicated to a credit union by a member in relation to the provision of a financial service

That person must be suitably qualified to undertake that task.

What is a suitable qualification?

Recognised qualifications are contained in the MCC but at a high level include those such as:

  • Qualified Financial Advisor
  • Accredited Product Advisor
  • Registered Stockbroker
  • Certificate in personal financial planning
  • Certified insurance practitioner

Note that this list is not exhaustive and we advise that people would consult the MCC to confirm their individual qualifications are recognised.

Transitional Arrangements

Where a person is undertaking one of the new PCF roles on 1 October 2024 and does not hold an appropriate qualification, that person may continue to perform that function on a deemed qualified basis until 1 October 2028.

However, that person must be working towards a relevant recognised qualification and is expected to:

  • Register for the first available sitting of the relevant exam
  • Work towards obtaining the qualification on a timely basis until complete
  • Maintain records of the exams completed, results obtained and exams scheduled and
  • The qualification must be obtained by 1 October 2028

What Should Credit Unions Do?

Credit Unions should commence the process of preparing for the implementation of these changes by doing the following:

  • Examine the additional PCF roles and ascertain if the credit union provides services that would be captured by the requirements to appoint a PCF function holder
  • Consider what recognised qualifications individuals within the credit union hold and whether these are sufficient for ensuring compliance
  • Draw up a plan to ensure that where individuals need to take on additional qualifications that this can be achieved no later than 1 October 2028
  • Amend training policies and plans to include CPD requirements in respect of ongoing requirements to maintain qualifications
  • Amend existing fitness and probity policies and procedures for the changes coming
  • Include the additional PCF function holders in the fitness and probity due diligence process for your credit union and ensure fitness and probity files are complete with appropriate evidence of compliance
  • Ensure that risk registers and compliance plans are updated in respect of new risks and compliance checks

Contact Us:

For more advice on the New Fitness and Probity Requirements for Credit Unions, or to discuss our Credit Union Services, please contact a member of the RBK Governance, Risk & Assurance Team:

  • Adam Gannon (090) 6480600
  • Michelle O'Donoghue - (090) 6480600

Michelle O'Donoghue

Governance, Risk and Assurance Partner

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