Dáil Éireann debate -
Tuesday, 25 Feb 1997

Vol. 475 No. 4

Credit Union Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Molloy

Ba mhaith liom fáilte a chur roimh an Bille seo thar cheann mo pháirtí. Tá an-obair déanta ag an Chomhar-Chreidmheasa ó 1958 nuair a bunaíodh é. Is mó an tairfe atá bainte ag na baill as ó bunaíodh é agus tá siad ag fanacht le fada le Bille mar seo. Ba mhaith liom comhgháirdeas a dhéanamh leis an Aire Stáit as ucht an méid oibre a rinne sé féin ag réiteach an Bhille seo chun é a thabhairt os comhair na Dála.

Tá rudaí áirithe ann áfach nach bhfuilim róshásta leo agus beimid ag déanamh moltaí fúthu sin.

I pay tribute to the Minister of State at the Department of Enterprise and Employment on his work in bringing this Bill before the House. I will put aside the pre-electoral political sniping in which the Minister of State indulged over the weekend. The credit union movement has waited a long time for this legislation. Not everybody will be 100 per cent happy with the Bill as published, but the Minister of State should be congratulated on introducing such comprehensive legislation in a vitally important area.

The credit union movement has been one of the outstanding success stories of the economy over the past 40 years. The movement started in Ireland in 1958 and by the end of the following year there were three credit unions up and running. They had 200 members and total members' savings of £415. The growth since then has been phenomenal. There are now more than 530 credit unions with a total membership of more than 1.8 million. We often think of Irish sporting bodies as large organisations, but the credit union movement puts all of them in the shade. Total savings in credit unions now amount to a staggering £2 billion and they continue to grow at an impressive rate of 20 per cent per year. By any standard this represents a tremendous record of achievement in 40 years.

Equally impressive is the manner in which that success was achieved. We have a tendency to look to the State to do things for us. We set up agencies, committees and working parties. We hand out grants and make tax concessions available. The credit union movement has grown and prospered without any State assistance. There have been no grants and no help from State agencies. The opposite is the case. The credit unions, as the employers of 1,500 people, are big contributors to the Exchequer every year and have invested hugely in Government securities. They have helped the State instead of being helped by the State.

The credit union movement is characterised by a philosophy of self help and community spirit. We could do with more of that philosophy. My party leader was taken to task recently by left wing ideologues for suggesting that we should help people to help themselves, as if this was an heretical statement. Can there be any better example of the way in which people can be helped to help themselves than the success of the credit union movement over the last 40 years? The acceptance of and support for the self help principle in Ireland can be gauged from the fact that in terms of membership as a percentage of total population, Ireland ranks fourth in the world league table of credit unions.

Local communities in villages, towns and cities pool their resources to help each other. The credit unions show what could be achieved if we focused less on bureaucracy and more on releasing the tremendous energy and community spirit that is such a positive feature of our life. The movement is an excellent example of what can be achieved by voluntary effort. It depends on 12,000 voluntary workers throughout the country and, largely because of this voluntary effort, the unions can offer a cost effective service to their members.

It should not be forgotten that the credit unions have also played a valuable role in poorer communities by presenting a real and attractive alternative to illegal moneylenders or even legal operators charging extremely high interest rates. Credit unions have helped to maintain the social fabric of many communities by making available small loans at modest cost to enable people to get over short-term financial problems.

I will deal with some of the problems in the Bill and I will start with the limits it places on loans and deposits. The Bill proposes a maximum limit of £20,000 on shares and a maximum limit of £20,000 on deposits. These figures might appear large at first sight but they must be seen in the context of redundancy as a fact of life in modern Ireland. The Minister of State will be aware we are losing more and more of our traditional labour intensive industries. Packard Electric in the Minister of State's constituency is an example of this phenomenon. Large scale redundancies are also becoming common in the semi-State sector. The ESB, for example, is in the process of shedding thousands of jobs as part of its restructuring and rationalisation programme.

In many cases, the workers being made redundant will have conducted most if not all of their financial business with their local credit unions. However, they will find when lodging their redundancy cheques that they might not be able to deal with the credit union because their investment is too large. This will force people away from credit unions and into the mainstream financial services sector at precisely the time when, it could be argued, it makes most sense for them to stay with the credit union.

There is no limit on deposits under existing legislation governing credit unions. It appears arbitrary in the extreme to impose such limits now. The Minister of State does not need to be reminded that credit unions operate on a one member, one vote system. It makes no difference, therefore, in terms of voting control whether an individual owns £50 or £50,000 worth of shares. The Minister of State should consider deleting the upper limit on deposits or increasing the limit to a more realistic figure than the £20,000 proposed.

A similar situation arises with regard to limits on loan advances. The Bill proposes a cap of £20,000 on the amount that can be advanced to an individual. This cap will impose a severe limitation on the ability of credit unions to satisfy the needs of their members. The credit union movement deals mainly with small borrowings, the average loan amount being about £2,000. Nonetheless, there are many cases in which a sum of £20,000 would be unrealistically small. The credit unions are not keen to take on the banks and building societies in a head to head battle for the home mortgage market. However, that is not to say there are not areas of the housing market in which the credit unions have a role to play. Local authority tenants seeking to buy their homes from the council might be more likely to approach a credit union than a mainstream financial institution. Equally, people seeking to extend their homes would like the option of going to their local credit union. A sum of £20,000 is not great in terms of the cost of home extensions.

I might understand the need for this new limit if the credit unions had been guilty of overlending and if there had been an unacceptable level of loan defaults but that has not been the case. When it comes to prudential management of their loan portfolios, the credit unions have a record of which any bank manager would be proud. In the most recent year for which figures are available the value of loans more than 13 weeks in arrears was just over 3.5 per cent of total loan advances — a low figure by the standards of commercial banking which hardly gives rise to concern. As with the cap which the Bill imposes on deposit amounts, this seems to be an arbitrary measure which gives inadequate discretion to credit union managements. Those managements have shown their ability to use their discretion wisely and we should continue to trust them to do so.

The £20,000 limit on loans will discriminate against casual workers whose only source of loan finance is the credit union movement. Casual workers form one of the largest groups in the labour force. Some have part-time jobs, some are on zero hour contracts and others are on fixed term temporary appointment contracts. These contracts are becoming increasingly common in foreign owned industries in Ireland, many of which employ the bulk of their workforce indirectly through agencies on nine-month temporary contracts. This means the workers do not have the same rights and privileges as permanent staff. Increasing regulation of the labour market has resulted in a dramatic rise in the number of casual workers and there are up to 200,000 people in various forms of casual employment.

The mainstream financial services industry does not cater for these people. If they want to borrow money for a house, a car or a family holiday they would be unlikely to satisfy the lending criteria of the large financial institutions. For people in casual employment the local credit union is their only bank and the credit union fills this role admirably. It is incumbent on the Government to make proper provision for casual workers to avail of financial services. Imposing an arbitrary lending limit of £20,000 on credit unions gravely inhibits their capacity to deal with the needs of casual workers. It prevents them from offering housing loans to such workers. As it is, people in this category are forced to depend on the public housing system at great cost to the taxpayer. Why not allow them to help themselves? Why not give them the opportunity to buy their own homes? Why not lift this arbitrary and unnecessary limit?

The credit union movement operates on an all-Ireland basis but this Bill will drive a considerable wedge between the credit unions in the two parts of Ireland. The Minister of State should examine the legislation on credit unions in the UK. The British legislation recognises there is no sense imposing a single arbitrary limit on all credit unions regardless of their size. It also allows for a greater exercise of discretion by the management of individual credit unions. The UK formula allows for an individual loan to be advanced to the value of 1.5 per cent of total paid up shareholdings or up to 20 per cent of a credit union's general reserve. This is a more realistic arrangement especially when one considers that some credit unions can have total assets of £30 million or more. The UK limit allows for a maximum limit of £10,000 in the case of smaller credit unions at an early stage of development where the percentage referred to would be so small as to be meaningless. The Minister of State should reconsider the caps he wishes to impose on deposits and loans. He should consider following the British legislation in this regard.

There are not many movements which operate on an all-Ireland basis. The credit unions form one such movement and we should try to achieve as much harmonisation as possible. Instead, the Minister of State seems intent on putting in place entirely different regulations to those which obtain north of the Border.

The Minister of State might also consider that the £20,000 limit would place a major constraint on the credit unions' ability to lend to small businesses. The Minister of State's Department is well aware of the difficulties experienced by small firms in securing loan finance from the mainstream financial institutions. Relaxing the £20,000 limit would be of considerable help in this regard.

There is an old maxim which tells us "If it ain't broke, don't fix it" and this applies to the credit union movement. For the past 40 years the credit unions have been self-regulating. During that time no credit union secretary absconded with the life savings of its members, no credit union has collapsed due to mismanagement or fraud and no credit union has been implicated in any kind of financial scandal. Elsewhere in the financial services industry there has been a sad litany of fraud and deception, particularly in relation to financial intermediaries, as far back as the 1970s. However, we have been slow to take the necessary preventative measures to avoid people losing their savings. By contrast, the credit union movement has been a paragon of virtue — self-regulated, it has worked extremely well; depositors have not lost money and credit unions have not collapsed due to bad lending.

The only reason for the closure of any credit union has been the collapse of the common bond. In other words, credit unions based in particular firms have had to close when the firms closed — Semperit in Dublin is an example with which the Minister of State would be familiar. In these cases, an orderly transfer of engagements to neighbouring credit unions has always been accomplished in an effective and efficient manner.

This Bill gives new powers to the Registrar of Friendly Societies with regard to the regulation of credit unions. It is my understanding the credit union movement has no difficulty with the overall prudential requirements laid down in the new legislation. It is important that the registrar and his staff do not become unduly involved in day to day decisions which should remain the preserve of credit union managements.

The Irish League of Credit Unions has played an important part in the development of the credit union movement over the past 40 years. The league has also played a key role in ensuring individual credit unions complied with all prudential requirements and new unions had the appropriate management and control systems in place from the day they began operations. In the past six years total savings in credit unions have trebled. It is a tribute to the work of the league that the explosion in the credit union movement should have occurred without scandals or shocks to the system.

It is strange that the league of credit unions is not mentioned in the Bill. Will the Minister of State explain why? The Bill should provide for a leading role for the league. It would be better and more cost effective to let the league continue the job it has been doing so well for so many years rather than hire more civil servants to work in the office of the Registrar of Friendly Societies.

Several of the more "go-ahead" credit unions have started to offer a variety of new services. Some of them operate ATMs, some offer foreign exchange services and some sell motor insurance. Section 48 requires credit unions to secure approval from the Registrar of Friendly Societies before offering any new service to their customers. This process could prove to be cumbersome, bureaucratic and unnecessary. In many cases, these services, such as foreign exchange transactions, do not involve any risk to depositors or shareholders. Other transactions, such as the sale of motor insurance, are conducted on an agency basis and do not carry any inherent risk. In an era when financial products can be bought in supermarkets, the philosophy upon which section 48 is based seems to be outdated and overcautious.

The Bill does not refer to corporation tax. Until now, credit unions were excluded from the provisions of corporation tax legislation, a reflection in part of the voluntary nature of the movement. This Bill gives rise to uncertainty in that regard. I am sure it is not this Government's policy to impose corporation tax on credit unions because to do so would amount to imposing a tax on voluntary effort and community spirit. Perhaps the Minister might use this opportunity to clarify the position on corporation tax. Will he give an assurance that the credit unions will continue to enjoy the same tax exemptions as before? This is a serious issue for the movement and it is important to dispel any lingering uncertainty about the tax treatment of credit unions.

Credit unions have not so far been required to comply with EU banking directives. I understand Brussels is satisfied that credit unions can be exempted from the directives on the basis that they offer their services to their members only and not to non-members. Nonetheless, it is important to have reassurance in this regard. The credit union movement has thrived without the need for huge and expensive bureaucracy. It would be a pity if the EU imposed a heavy compliance burden on the movement at this stage. Accordingly, I ask the Minister to outline the current position and to state if credit unions will continue to be exempted from the European banking directives.

This country owes a huge debt to the credit union movement. Credit unions ensured that financial services were available to all sections of the community, regardless of social status or income. They have helped the economies of many towns and villages to thrive by pumping local savings into local investment. They have harnessed voluntary effort for the common good and applied community spirit to improve the quality of life for hundreds of thousands of people. Were it not for the credit unions, how many families would not have bought a car, extended their house or sent their children to third level education?

The credit union movement keeps a relatively low public profile. It does not engage in wholesale political lobbying and it does not run aggressive campaigns like some of the more vociferous interest groups. Instead, it is content to go about its business. This debate, however, is important for the future of the credit union movement. It is one of the few occasions when this House has been asked to look at the needs of the movement to see how best they can be met through new legislation. We should all take that task seriously.

I commend the Minister on introducing this long awaited Bill. However, I ask him to consider amending it in the ways I have suggested.

Mr. Gallagher

(Laoighis-Offaly): I join Deputy Molloy in welcoming the introduction of this Bill and the work the Minister has done. This subject has been raised on the Order of Business every week since I became a Deputy in 1992. I often wondered if the promise to introduce this legislation was like the promise to drain the Shannon. However, I am delighted the Minister has ensured it is not an empty promise and that the work done by the Department, the Irish League of Credit Unions and individual credit unions has resulted in the publication of this Bill. I regret that Deputy Ned O'Keeffe is not here to continue his contribution to this debate. I was surprised he did not welcome the Bill, although he suggested ways to amend it.

I compliment the credit unions on the work they have done to highlight their concerns and the Irish League of Credit Unions on voicing those concerns to the Registrar of Friendly Societies. I also commend the league on the lengthy negotiations it had with the Registrar of Friendly Societies, the Minister and his Department on proposals for this new legislation. I am sure that process is not yet concluded and I expect that further consultations will take place to ensure the right legislation is put in place. The Minister said it was unprecedented for a particular group in the financial services sector to have such an input into the drafting of legislation to govern its operation. I am glad the credit union movement is involved in this process because, as previous speakers said, it is the most widespread community movement in the country and the best people's bank.

Much discussion has taken place in my party about a third banking force. I have always argued that the credit union movement is an effective third banking force. When I joined the queue in my local credit union on the Friday before Christmas, I remarked that 90 per cent of the people there would probably not be welcome inside the door of the bank down the street. The credit union in Tullamore is the largest in the county, although there are over a dozen smaller credit unions in my constituency which offer equally important services to the community.

It is a tribute to those who made such an effort over the past 40 years that a movement which started in Germany in the last century and which diversified in so many different ways — in other European countries some have taken the form of commercial banks which are almost indistinguishable from other banks — has assumed a particular form which has enabled almost all members of the community to avail of its financial services, whether for First Communion, Confirmation, to buy a car, house or for investment in business.

I compliment the credit unions on providing more services than the traditional savings and loans schemes. The new services they offer range from foreign exchange transactions to ATMs. One of the most effective and least publicised areas in which the credit unions have become involved is combating money lending in our community. Many credit unions have been doing this for a number of years through local groups such as the St. Vincent de Paul. The introduction of the money advice and budgeting service on a more widespread basis would not help people to manage their finances and to stay out of the clutches of money lenders without the active cooperation of the credit union movement. I compliment the credit unions on the time given and effort made by their officers, volunteers and paid officials to ensure the success of this service. We need legislation which updates the framework for the operation of credit unions, recognises their role and allows them the flexibility to continue to develop their services.

My attention has been drawn to a number of aspects of this Bill by the volunteer workers in credit unions and the Irish League of Credit Unions and I mention them in the full confidence that the Minister will deal with them in a satisfactory manner either at the conclusion of the Second Stage or on Committee and Report Stages.

I agree that the role of the Irish League of Credit Unions should be given specific recognition in the Bill. There are concerns that the protection afforded in section 12 by the use of the words "credit union" may not extend to the league. Will the Minister consider introducing a new subsection or an amendment which will ensure that the Irish League of Credit Unions comes under the provisions of sections 12(3) and (4)?

Concerns have also been expressed regarding the provisions for the recognition of a body of credit unions. The credit union movement would expect that the current membership of the league, which includes members in Northern Ireland, would be recognised in the Bill and that whatever framework is established would make it clear that the league is covered by this Bill.

Assurance has also been sought regarding the mutual assistance insurance and other services provided by the league. Will the Minister confirm that the insurance products provided through the ECU assurance system, the savings protection scheme and the CUMAS/CUNA arrangement against loss due to fraud or dishonesty will continue? They have worked well and offer great security to individual credit unions and their members and it would be unfortunate if there were doubts about the future operation of these schemes.

Will the Minister clarify the provisions on confidentiality and the powers to inspect books? Will the monitoring and regulation of affiliates already carried out by the Irish League of Credit Unions continue under the Bill? This monitoring is an example to the wider financial services sector of how a responsible body of volunteers can provide effective self-regulation.

I urge the Minister to consider including a section recognising the Irish League of Credit Unions as it would reassure the league and its members.

The league has made suggestions regarding section 6(2) which refers to the conditions of registration. There is merit in specifying a number of the objects for a credit union as mandatory and allowing others to be optional. Section 6(2) is too loose. Under section 6(1)(a) a society has to be formed for one or more of the objects specified in subsection (2). The league has suggested that, in subsection (2), objects (a) to (c) be grouped and be mandatory and that objects (d) to (g) be optional. There is a lot to commend this argument.

I am concerned about the maximum loan which may be sanctioned by credit unions. The Bill allows for sufficient flexibility whereby the Minister may vary the limits on shares and deposits without further legislation. With a minor adjustment we may be able to achieve a broad level of agreement regarding shares and deposits. However, I am concerned that the maximum loan provisions do not allow for this level of flexibility. The average loan sanctioned is small. As credit unions operate on an individual basis, the supervisors and directors know their members and the whole basis of the movement rests on trust, it is not too much to allow each board of directors to set their own maximum loan limits. The league has proposed that this figure should be £30,000 or 5 per cent of assets. Whatever the limits they should be flexible. Where members have a good track record of savings or where a number of people wish to invest and set up a co-operative, the board should have flexibility to decide on the level of the loan.

The Minister has given assurances regarding the property rights which will be attached to credit unions. The movement is concerned that these provisions should not be too restrictive but have a regulating provision whereby the registrar may intervene in cases where abuse is suspected or property is not being used appropriately. There is no difference between the Minister and the movement on this issue but further clarification can ensure a meeting of minds.

I am concerned about the power of credit unions to offer additional services. Where a service offered is a principal service there should be a process of regulation through the registrar. However, where a credit union has the initiative to offer a service on an agency basis it should not be restricted from doing so. Providing a greater range of services on an agency basis has been the hallmark of the development of credit unions over the past number of years. It would be unfortunate if such initiative was stifled by undue delay in acquiring permission from the registrar. Offering these services on an agency basis involves no risk to the members. The risk attaches to the principal which is a foreign exchange or insurance provider and the provisions regarding additional services should be loosened to allow credit unions to continue to expand.

The restrictions on remuneration in section 68 are advisable but I draw the Minister's attention to a practical consideration. There is a provision in section 68(1)(c) for the restriction on remuneration to be extended to credit control officers. In many larger credit unions, members have agreed at their annual general meetings to allow a salaried member of the credit union staff to act in this capacity for practical reasons. That should not be impeded by this legislation.

Many concerns have been expressed about the powers of the registrar. I understand the Minister's and the Department's approach. After the Tony Taylor affair, people wanted to know why there was not more regulation, so it is understandable that caution would be the order of the day in this regard. However, the Irish League of Credit Unions could be allowed to effectively continue its role in this regard by the making of some minor changes to the legislation. The suggestion that the powers of the registrar should be consolidated by a redrafting of the provisions which would be comprehensively laid down in Part VI of the Bill has much to commend itself.

Some members of credit union boards to whom I have spoken have said there is a penalty in every section. They are not saying that penalties should not be imposed or that the registrar should not have power, but that the spirit of initiative and enthusiasm which is the hallmark of the credit union movement may be stifled by continuous repetition of powers and regulations. An accommodation of people's concerns has been achieved before through imaginative drafting of legislation and it could be done for this area. Similarly, in respect of penalties, some board members are afraid that, if they make a wrong decision, they may end up in court. That is not going to happen. However, to allay their fears, the subject of penalties could be redrafted and consolidated in Part XI.

These suggestions are made in a positive fashion and arise from discussions I had with members of credit unions, especially in my constituency, and I expect the Minister to respond to them. I am happy to support this Bill which is a landmark for the credit union movement. I am confident that, following its passage, it will not only serve the needs of the credit union movement in the late 1990s but will also provide the type of flexible arrangement to allow for its continued development well into the next century.

Mr. M. Kitt

Cuirim fáilte roimh an Bille agus ba mhaith liom comhgháirdeachas a ghabháil leis an Aire Stáit. Bhíomar go léir ag súil leis an mBille seo le fada an lá agus tá áthas orm go bhfuil sé sa Teach.

I congratulate the Minister of State and welcome the Bill. I am a great supporter of the credit union movement and, having seen its work at first hand, I also support its efforts to develop, to help people and to establish the spirit of self-help in small towns and villages in rural Ireland. The delay in introducing this Bill has been very frustrating for the movement. I have met many delegations in my years in politics, but the lobbying by the credit union movement on this was most effective in that it had meetings in every constituency to impress upon elected representatives the urgency of introducing this legislation, so I am glad we are discussing it this evening. It is a very large Bill of almost 200 sections which is the reason for the delay in its introduction.

There is concern about the cap of £20,000 on loans. It has been pointed out to me by the Irish League of Credit Unions that it wishes to have 5 per cent of assets available for loans and even 10 per cent could be made available for that purpose. It is important that this cap be lifted. Why have a cap? It must not be forgotten that loans can be had from credit unions for extensions to houses, and for new houses in some instances. When a son or daughter obtains a site for a house from their parents or relations, they often get bridging finance from credit unions and with the help of a local authority loan they sometimes look for a second loan. This is where I see the real difficulty with the cap of £20,000. For example, under this legislation, a person who reduces their loan to £19,000 would only be allowed to borrow a further £1,000. This must be addressed and I hope the Minister of State will find some way of dealing with it. The same is true of the limit of £20,000 on shares and deposits.

There may be confusion about the cap because I noticed in an interview the Minister of State gave to the Credit Union Review, a question was asked as to whether one could borrow £20,000 or £40,000. The point made by the interviewer was that the Bill referred to a £20,000 cap on indebtedness which suggested that, if one had shares of £20,000, one could borrow £40,000 as the net indebtedness would only be £20,000. The Minister replied that the optimum loan was £20,000 but went on to say that he had committed himself to the Irish League of Credit Unions continuing its involvement and participation in the Bill until it was enacted by this House. Perhaps the Minister can give more information on that.

The Minister went on to ask what average working member of a credit union needed to borrow more than £20,000 or had more than that amount to deposit. The answer has been given by many Deputies. Deputy Molloy referred to the issue of redundancy. There is also the matter of people who are afraid to deposit their money with any financial institution. That should be dealt with by the Government, especially by the Minister for Social Welfare to whom we have put certain proposals relating to the rate of interest assessed by his Department. That is another issue which should be addressed.

The best example I could give of a credit union and its associated concept of self-help is a comparison with a group water scheme where people come together and work voluntarily to provide a service. Credit unions are not centralised organisations with a network of branches like a bank or building society. Many of them are small, local organisations. One of their great assets is that they can be a source of funding for small business projects and agricultural development. I live in County Galway where we are honoured to have a Western Development Commission since 1 January this year. The Minister of State with responsibility for western development, Deputy Carey, has said there will be funding in this year's Estimates for the commission. There could possibly be £25 million from the Government over seven years. Indeed, the Minister of State has gone so far as to say that with European and private funding it could be £100 million or £200 million over seven years.

Credit unions have a major role to play in helping small business projects with the type of funding available from the Western Development Commission. The maximum loan of £20,000 will also limit the role of credit unions as well as business and agricultural development in the western region. Every credit union should have a special deposit fund which could be used exclusively for local commercial development. They are in a better position than other financial institutions to help with that.

Another source of worry for the credit union movement has been the proposal that they must sell off any property they are not using entirely for themselves. The Minister of State addressed this issue in his opening statement but he knows there are buildings which provide office accommodation for other agencies and services that are also of value to the community. It is part of the ethos of credit unions to provide these services for other agencies.

Other speakers mentioned the money advice and budgeting service which are part of the credit union ethos. The Minister for Social Welfare, Deputy De Rossa, was in Tuam recently to launch the money advice budgeting service, or MABS as it is also known. The Minister, and local credit union leaders, stressed that the areas of money advice and budgeting and credit unions go hand in hand. People have got into serious difficulties through borrowing money at high interest rates both from money lenders and financial institutions. Money was given out too freely in the past. The money advice and budgeting service is of great benefit. I hope that this type of budgetary advice will be provided in every credit union area, and what better place to provide it than in a building owned by the credit union? I hope that important issue will be addressed. Such property should be available to credit unions, not for speculation or a quick buck but for people to obtain budgetary advice and secure some measure of financial independence. People in credit unions always say that one of their aims is financial independence through regular savings. In this way credit union members can have fair and affordable access to loans.

Some concern has been expressed at the possible effects of over-regulation given the Bill's provision for a regulator. Credit unions are not opposed to prudential regulation but they are not happy that the heavy hand of a regulator could interfere too much with the proceedings of each credit union because they are so different. Varying systems exist in Northern Ireland and the Republic because different legislation was involved in setting up the credit union movement in both jurisdictions.

Each credit union should be given the opportunity to regulate itself. I am familiar with credit unions in County Galway that practise self-regulation to an effective degree, and none of their members has lost a penny in 35 years of operation. I do not know if the Minister of State, Deputy Rabbitte, fully understands that. In his interview with the Credit Union Review, he said: “I think it is entirely appropriate and should be only a cause of reassurance that the regulatory system is effective and vigorous”. That is all very well but the Minister of State should also stress that the heavy hand of the regulator will not cause difficulties for or interference with credit unions.

Credit unions put a great deal back into the community. I recently attended a meeting of the community games whose organisers gave much credit and praise to the credit unions. It was unbelievable. The credit union movement sponsored the games and provided awards for community leaders involved in preparing teams in every parish. It was a big undertaking and an ideal type of involvement for credit unions which are part of the community as well as being part of the community games network. Every year credit unions are involved in sponsoring St. Patrick's Day parades. That is evident in the town of Tuam and I wonder how many towns would not have a parade were it not for the credit union movement's involvement.

The credit unions, which were introduced in 1958, have been a great success. There are 531 credit unions at the moment with 1.9 million members. Savings of almost £2.3 billion have been made, while loans have totalled approximately £1.5 billion. Most significant is the fact that 10,000 volunteers work in credit unions along with 1,500 part-time and full-time workers. That shows the great respect there is in the community for the credit union movement.

I hope the Minister of State will make the necessary amendments to the Bill to allow the movement to develop. Credit unions are owned and run by their members whom they exist to serve. That is a great aim and ideal for the movement to have and it is worthy of support. I have always been a supporter of the credit union movement and I hope it will prosper in the years ahead.

Mr. Bradford

Legislation to deal with the credit union movement and the enormous growth in that organisation is urgently required. It has been sought for a long time by all those involved in the management of credit unions. I congratulate the Minister of State on succeeding in introducing the legislation in recent weeks.

In discussing the Credit Union Bill we must focus on the fact that credit unions are unique and separate financial institutions. We are not speaking on a Bill dealing with the banking industry, building societies or other such financial institutions. We are speaking about the credit union movement which is a voluntary co-operative organisation consisting of local community members helping and assisting each other. This legislation must enhance and improve the voluntary and community aspect of the credit union movement.

Debate adjourned.