Mary O'Rourke
Question:17 Mrs. O'Rourke asked the Minister for Enterprise and Employment the contacts, if any, he has had with the credit union movement; and, if so, the changes, if any, he intends to make to address its concerns. [3109/97]
Priority Questions. - Credit Union Movement.
The Credit Union Bill, published before Christmas, will consolidate existing credit union legislation and set out an updated framework for the development and regulation of the credit union movement. The terms and scope of the Bill were the subject of detailed discussions over a number of years culminating in a broad measure of agreement between the Irish League of Credit Unions and the Registrar of Friendly Societies. I have had six formal meetings with ILCU representatives since taking responsibility for this Bill. In addition, I addressed each of the last two AGMs of the league.
The published Bill contains certain changes from the broad agreement arrived at between the league and the registrar. In some cases these arose from policy decisions made by me about certain provisions, including ceilings on holdings in shares and deposits and on loans. In other cases, the parliamentary draftsman, supported by the Attorney General, decided that for legal or technical reasons the wording which formed part of the agreement with the league was not appropriate or workable.
The Bill, as published, offers a number of improvements for credit unions and their members. First, the existing shares limit of £6,000, set in the mid-1980s, is being increased to £20,000, an effective doubling of the limit in real terms. Second, the Bill meets the long standing demand of the credit union movement to expand the range of services offered by credit unions to their members. Third, it updates and consolidates existing legislation in a variety of areas, many of which were identified by the movement as out of date. While the league has raised some concerns, it should also be stated that the league board has generally welcomed the Bill and specifically welcomed many of its features.
Following Government approval to publish the Bill, I met the board members of the Irish League of Credit Unions and the Credit Union Advisory Committee on 18 December last. General appreciation was expressed for the clearance of the Bill by the Government. I invited the league and the advisory committee to study the Bill and make their views known to me.
At further meetings with the league on 22 January and with individual credit unions, concerns were expressed to me about certain aspects of the Bill. I also spoke and took questions at the open session of the league's special general meeting in Limerick on 26 January at which I heard at first hand the comments of many credit union representatives on the Bill. I have made it known that I will consider well reasoned arguments for change or improvement to the Bill, but generally we have got the balance right. I have also indicated my preparedness to review the published ceiling for loans. I anticipate that it will be some weeks before any specific changes I might propose to the Bill will be available. I have recently arranged for officials of my Department, together with the Registrar of Friendly Societies, to meet regularly with league representatives this month to review the Bill. I also expect to receive the advice of the Credit Union Advisory Committee on its terms shortly.
The Bill safeguards the social and mutual purpose to which the credit union movement is dedicated and underlines its community self-help principles. I am determined it should achieve a good balance, facilitating the growth and development of credit unions without undermining the essential character and ethos of the movement as a whole.
Will the Minister consider the concerns expressed by the credit union movement about the proposed changes in the regulatory structure? Previously credit unions regulated themselves and did so very efficiently and with stunning success over many years. However, there is considerable concern about the regulatory structure proposed in the Bill. What is the Minister's view on this matter.
As the Deputy correctly stated, the credit union movement had stunning success in terms of the prudential supervision of its members' investments over the years. However, the credit union movement has grown beyond all expectations over the past 30 years and will grow further after the enactment of the Bill. Already they have approximately £1.3 billion in savings and 1.4 million members throughout the country. It is important, therefore, that the regulatory environment is such that credit union members can be assured the prudential supervision of their affairs is beyond doubt. There is merit in having a watchdog of the State, in the person of the Registrar of Friendly Societies, to do that. The point Deputy O'Rourke makes is probably more related to the credit union movement's objections to what it sees as the day to day intrusion of the Registrar into the way it manages its affairs as distinct from the regulatory provisions as we know them in certain other areas. I have invited the credit unions to enter discussions with my officials and the Registrar directly to see whether I can make changes in that area. I would be minded to do that but, having regard to what we have seen elsewhere in the financial services sector, and acknowledging the exceptional record of the credit union movement, I want to ensure we would not be vulnerable to the kind of incidents we have seen elsewhere in the financial services sector.
Perhaps Deputy O'Rourke will ask a very brief question. I must get to Question No. 18 or I may not call it at all.
I am also conscious of the need for a balance as we are currently examining what can only be described as extraordinary carry-on in another financial sector. The Minister of State is correct in that I was referring to the day to day intrusion and over-regulatory approach by the Registrar of Friendly Societies, particularly when such a regime never obtained for credit unions and having regard to the fact that the Registrar is strapped for resources. I want to put two brief points to the Minister of State. The first concerns the element of voluntarism which was always at the heart of the work of credit unions; people joined them voluntarily and worked for the mutual good of their members and one another. Will the Minister of State ensure that spirit is expressed in the new legislation, although I realise that will be difficult if it becomes too obtrusive in everyday matters? The second point is one that has been put strongly to me by members of credit unions in the midlands region and concerns the use of buildings. Many credit unions have moved into new buildings, put them in proper order and rented them to enterprise groups or other well meaning groups helping the community.
I am sorry, Deputy, but I have a problem. If I do not call Deputy Harney's question in two minutes I am prohibited from calling it.
The Chair can call it in general time.
Standing Orders prohibit me from doing that with this question. I thank the Deputy for her co-operation.
On a point of information, what does the Chair mean?
If I do not call Question No. 18 within the allocated 20 minutes——
It goes into general time.
No, it does not. Extraordinary as it may sound, the other two questions do but that is not the case with Question No.18. That is the reason I ask the Deputy for her co-operation in this matter and the Minister also, although the Chair does not have a function in regard to Minister's replies.
It is a mystery.
There is no mystery, just Standing Orders.
The notion of my squeezing out Deputy Harney in any context would never enter my mind. First, there is a misunderstanding of the Bill as it relates to buildings. I am satisfied as a result of the meeting in Limerick that I can satisfy the requirements of the credit union movement as it relates to the management of buildings for their use. There is no problem in that regard. Second, on the point of voluntarism, everything in the Bill is designed to protect that principle and others that have been at the heart of the credit union movement over the years. Third, additional staff have been provided for in the Government decision to support the work of the Registrar; when the Bill was approved by Cabinet it approved the provision of additional staff. Fourth, it is the expectation of the league that the 2,500 people currently employed in credit unions throughout the country are likely to increase to approximately 5,000 within a few years.