Before the debate was adjourned I said we must not fail to recognise the difference between credit unions and other financial institutions. The legislation is designed to cater for an updated and modern credit union movement. There has been a strong demand for the introduction of the legislation but it is important to remember that we are dealing with a non-profit making voluntary organisation and not a bank or building society. The legislation must mark the difference between credit unions and other financial institutions.
The number of credit unions has increased significantly since the establishment of the first credit union in 1958. There are now approximately 430 credit unions, while the money on deposit amounts to approximately £2 billion. Since 1958 only one Act has been introduced to deal with the structure of credit unions, namely, the Credit Union Act, 1966. The introduction of this legislation is, therefore, timely.
The legislation will ensure that the benefits which have accrued to local communities from the establishment of credit unions will continue. Credit unions have enabled thousands of people who would not have taken out a loan with a bank or building society to secure finance to buy cars, televisions, videos, etc. This type of co-operative spirit and investment of local money in communities is unique to credit unions. This is why it is important for the legislation to mark the clear distinction between credit unions and other financial institutions.
The credit union movement has given local communities a great sense of empowerment. The appointment of local directors, the involvement of local people and the investment of money locally is very important from the point of view of community development. I hope the contact between local enterprise boards, community groups, etc. and credit unions can be further developed in the future. The extension of the maximum lending period will enable credit unions to offer loans to small enterprises and industrialists and will enable local interest groups, enterprise boards and companies to obtain funding to develop. This is a natural follow on from the present position.
Concern has been expressed about the limits being imposed on deposits, shares, loans, etc. However, if the credit union movement is to retain its separate identity and not become another bank, some limit must be set. This will enable the movement to grow and expand, while retaining its distinctive features. The limits proposed by the Minister are reasonable and will enable credit unions to maintain and develop their essential services. The Minister discussed these matters with the Irish League of Credit Unions and he is willing to take on board suggestions made by it and other interested parties, including Deputies. His proposals are reasonable and while concern has been expressed about the limits it is important that credit unions maintain their status as local non-profit making voluntary institutions. The extension of the maximum loan period will give credit unions the option to offer loans for commercial development, an option it did not previously enjoy. The Minister deserves praise for introducing this change.
There has been a significant increase in recent years in the funding invested in credit unions and in the number of people working voluntarily in the movement. There has also been increased liaison between the credit union movement and voluntary organisations. I welcome the close cooperation between credit unions and rural organisations, particularly farming groups. This has brought more people into contact with credit unions and ensured a new source of funding. The future of credit unions lies in developing new and close associations with the various sectors of society. Up until the 1980s most investors in credit unions came from one sector of society. This has changed and credit unions now deal with people from many areas in society. This will enable the movement to grow and prosper. The legislation will enable credit unions to attract more investors, thereby increasing the amount on deposit.
Because of the increases in investment and borrowings, it is important to put in place proper supervisory arrangements under which lenders and borrowers are fully protected. The Minister of State's approach in the legislation is quite proper and not over the top. He is simply ensuring that people can invest in credit unions in the knowledge that their money is absolutely safe and can seek loans in the knowledge that their applications will be dealt with properly. Any financial institution, large or small, needs to have such rules. If we want to see the credit union movement grow, we will have to have certain guidelines and regulations to protect the consumer. This legislation does that without hindering the development of the credit union movement in any way.
This is an extremely important Bill which will help ensure the continuing growth of a financial institution which is of growing importance to local and rural communities. I congratulate the Minister of State on bringing forward this legislation which has been long sought, particularly by those involved in the credit union movement. I am sure the Minister of State will listen to constructive amendments.
Many people are interested in this legislation. The Minister of State has listened to the Irish League of Credit Unions and I hope he will continue to do so. With some credit unions having greatly increased in size, the legislative demands and requirements of credit unions can vary dramatically. It is not a question of every credit union requiring the same results from this legislation. In my constituency there is a huge difference between the one or two very big credit unions and those which are focused on small villages and rural parishes. When I spoke to members of the credit union movement I sensed differences in their responses to the Bill. When we meet groups such as the Irish League of Credit Unions we must remember that the needs and requests of small credit unions may be quite radically different from those of larger ones.
I know the Minister of State will listen to all the arguments and take on board what is necessary in order to allow the credit union movement to develop and expand. The organisation has been tremendously beneficial to hundreds of thousands of people over the past 40 years and can continue that excellent work in the years ahead. This legislative framework is warranted and I hope the Bill will be passed over the next few weeks.