21/10/2025
Insights Blog

The Credit Union Act 1997 (Regulatory Requirements) (Amendment) Regulations 2025 (the “Amending Regulations”) entered into force on 30 September 2025. The Amending Regulations mark an evolution in the regulatory landscape for credit unions in Ireland and significantly expand the lending capacity of credit unions in the State. The reforms have been broadly welcomed and are expected to catalyse a new phase of growth and innovation in the credit union sector. This briefing outlines the key regulatory changes in force and to come, as well as the anticipated impact on credit unions, borrowers, and the wider financial services market.

Key changes to the Credit Union lending framework

The Amending Regulations have introduced several targeted reforms:

Increased lending concentration limits

  • They increase the concentration limit for house lending to 30% of total assets and for business lending to 15% of total assets. This increases the sector’s total lending capacity for these types of loans from €2.9 billion to €9.9 billion.
  • The limits are now decoupled, allowing credit unions to fully utilise both limits independently of each other.

Changes to the scope of a “house loan”

  • They amend the definition of a “house loan” to accommodate lending for residences that are not a person’s principal residence, such as holiday homes and buy-to-lets.
  • Other residence / non-principal residence lending is subject to a sub-limit of 2.5% (within the 30% lending cap) of total assets.

Removal of tiering

  • The previous framework operated a “tiered” system whereby lending concentration limits were linked to the asset size of the relevant credit union and, depending on the size of the credit union, required notification to, or approval from, the Central Bank of Ireland (the “CBI”) prior to being deployed.
  • The Amending Regulations removed tiering, with the result that all credit unions have the same lending concentration limits regardless of their asset size.

Simplification of underwriting and board reporting requirements

  • They remove prescriptive underwriting requirements relating to business loans, community loans and credit union-to-credit union loans.
  • They remove prescriptive requirements relating to board reporting on loan performance and related party lending. In their place, the Lending Chapter of the Credit Union Handbook includes new, high-level, guidance on board reporting.

Extension of CPC to Credit Union lending

In parallel with the lending reforms, the CBI has announced plans to extend the application of the revised Consumer Protection Code (“CPC”), including the Code of Conduct on Mortgage Arrears, to all credit union activities. In light of the changes to the lending framework, the CBI expects that credit unions will adopt a consumer-focused culture, including when advancing credit and when dealing with borrowers in arrears. The CBI’s intention is that credit union borrowers be afforded the same protections as other consumers of financial services. Whilst the CBI’s expectations will align with credit unions’ community focused ethos, some work will be required to enhance compliance frameworks in response to these changes, particularly in areas such as arrears handling, disclosures, and complaints management.

Impact on the lending landscape

The changes introduced by the Amending Regulations will have a significant impact on the lending landscape in Ireland. The increased lending limits will allow credit unions to diversify their loan books, develop longer term business strategies and ensure financial viability. They will also facilitate credit unions in competing more effectively with banks and other lenders and provide them with greater capacity to support local economic development. In addition, consumers and SMEs will benefit from greater access to credit, more competitive loan offerings, and enhanced, community-based financial services.

The CBI’s feedback statement on the initial lending consultation noted that the increased lending limits should be considered by credit unions in the context of potential business opportunities to support the transition to a low carbon economy. The CBI also noted that the changes to the lending limits could assist the sector in developing a universal product and service offering available to all credit union members, as initially proposed in the CBI’s 2022 Retail Banking Review. Once the changes brought in by the Amending Regulations have bedded in, we are likely to see further growth and innovation in this space.

Conclusion

The Amending Regulations are an example of regulatory simplification in action, evidencing a shift from prescriptive to principles-based regulation. They are also responsive to the evolution of the credit union sector, including its increasing growth and sophistication, and a recognition of the sector’s growing expertise, stronger governance standards, and greater risk management capacity. The Amending Regulations will provide the regulatory framework for credit unions to continue to grow, diversify, and compete, while also reinforcing the importance of prudence, governance, and consumer protection. As the sector embraces these opportunities, credit unions will be better positioned to deliver sustainable, community focused financial services across Ireland.