I listened with interest to the views expressed on all sides of the House. Clearly there is a welcome for this legislation. I am very much aware of the invaluable service credit unions provide. There are nine credit unions in my constituency, Dublin South, including two of the top 70. One of these is in my area of Dundrum, and I suppose it is important that I should declare my wife's membership of it. There are 14,000 credit union members in Dundrum, and 9,000 members in Rathfarnham, also in my constituency. As other Members have done, I too want to express my appreciation of the invaluable service they provide to the community. The people involved in running credit unions give voluntarily of their time, and I am very much aware of the crucial role they play in the community.
A number of Deputies have highlighted the role of the credit unions and of the Society of St. Vincent de Paul in Irish society, and I would echo their sentiments. As a public representative I am continually made aware of the special role played by both of these organisations in helping people in need, and there are many people in communities all over the country who need a leg up.
There has been much talk about the philosophy of the credit union movement. They have been rightly described as self-help institutions. Reference has been made to their voluntary efforts, their solidarity and their impact on society. Let me share with the House my experience during my time as Minister of State with responsibility for overseas development in relation to the work of Irish aid personnel in southern Africa and of Irish missionaries working abroad and interacting with communities in Zambia, Tanzania and the townships in South Africa. In many of these communities where Irish personnel interacted with the local community invaluable work was done in education, health and agriculture. There is a strong sense of solidarity in those communities, and leadership is often provided by the women. Having visited those areas and having had discussions with Irish aid workers and local people there, it was evident that, apart from providing technical assistance in health and agriculture, many of the Irish personnel in the missionary movement were involved in setting up credit union systems which, in turn, provided a strong local economy and support for small businesses in the communities.
I make this point to reinforce the fact that the credit union system is truly an international concept which reinforces a sense of community and solidarity among people at local level, and this is evident not just in Ireland but throughout the world. Credit unions fulfil a much broader role in societies throughout the world than simply providing loans and a means of saving for their members. This Bill has been a long time in gestation and I am glad it has finally been produced. I hope the Minister will take on board any constructive proposals put forward by Members in this debate.
I wish to turn to some of the points made by the credit union movement in regard to the Bill, many of which I agree with. According to the Irish League of Credit Unions their vision of the credit union movement, based on the co-operative, non-profit system, is seriously undermined by the Bill. This is a valid view and the Minister of State should take note of it. The Minister should think long and hard before introducing legislation that would hinder the growth of this movement which involves 12,000 volunteers working in their own communities throughout the country. The diversity of the credit union movement must be taken account of by the Minister when formulating appropriate legislation. I commend the fact that he has introduced legislation, but there are concerns across party lines about the need to get it right.
There are 427 credit unions varying in size from some with less than £500,000 in assets to others with £55 million. This diversity will require a flexible response from the Minister. This Bill does not meet the needs of the credit union movement because it is overly restrictive. A Minister who would claim to represent ordinary people — as he is doing in relation to the price of the pint — should not turn his back on a movement that provides invaluable support and assistance to ordinary people. Restrictive legislation such as this will impede the growth of credit unions. The Minister is fully aware of the concerns of the Irish League of Credit Unions and, in the course of his contribution, he made some comments about them. They are concerned about the capping of deposits by individual members. I support their concerns on this crucial issue. It is essential that the limits set on deposits should reflect a percentage of the credit union's shares and that the Minister should reverse his decision to provide for an absolute limit. The credit unions make this point time and time again, and it is valid. Under existing legislation there is no limit on deposits. It is difficult to understand why the Minister is interfering in such a draconian manner and disrupting a system that has had widespread support in the community.
The Bill also limits the amount of loans that can be provided by the credit unions to £20,000. Some 132 credit unions have issued loans in excess of £20,000 and 293 credit unions have issued loans ranging from £10,000 to £20,000. There is no doubt that the demand for loans in excess of £20,000 will increase in the future. These loans are taken out by ordinary people who want to carry out repairs to their houses, buy farm equipment, change their car or, increasingly, for business purposes. The Minister is committed to provide finance for those endeavouring to take up business ventures or expand their business, particularly small businesses. The plea by the credit union movement to cater for that sector should be met.
Restricting the monetary limit of individual loans will discourage investment in credit unions as members will not invest if they are not allowed to borrow at the level of their savings. At present there is no monetary limit on loans, and in light of the current success of the system I would ask the Minister to reconsider the restrictive nature of the proposals on loans.
The Minister may be considering a compromise solution by which he will raise the monetary limit on loans and savings, but I would urge him not to go down that road but rather to apply the percentage option which would allow for the continued steady growth and development of credit unions, small and large. Credit unions have operated under the Credit Union Act, 1966, with remarkable success, providing loans to members for 31 years for various purposes. The capping of limits in absolute rather than percentage terms would be disastrous and should not be contemplated by the Minister. If that option is taken it will damage irreparably the invaluable service provided by the credit union movement.
A key concern of credit unions is recognition of the Irish League of Credit Unions. The Minister rightly recognised the role of the league in presiding over the growth of the movement, but the Bill does not recognise the pivotal and central role the league plays in controlling and servicing credit unions. A new section should be introduced to allow such recognition by the Registrar of Friendly Societies so that the work currently done by the league is brought within the regulatory framework established by the registrar. The Irish League of Credit Unions has been subject to selfsupervision through a comprehensive self-regulatory system. The movement has its own savings protection scheme which has strict rules and procedures. That system has served members very well in protecting their savings over the years. It is vital that the savings protection scheme remains under the control of the movement in future.
Section 48 deals with new services. Many credit unions already provide on an agency basis additional services — for example, insurance, savings stamps, foreign exchange and other such services. This section allows credit unions to provide additional services to their members, but the system of approval of those services is cumbersome. The movement is concerned that there may be delays in approval of additional services by the registrar. I ask the Minister to take account of those legitimate concerns and recognise that, since the personal financial services sector is a fast-moving and changing sector, credit unions must be given the capacity to respond efficiently and speedily to their members' needs.
The Bill is dotted with references to offences and penalties relating to credit union activity. It is appropriate that penalties be brought together in one section, as was done in the Consumer Credit Act, 1995. That would provide for a much tidier and less intrusive Bill.
I am one of many Members who contributed to this legislation. I welcome the Bill which has been a long time in gestation. I have proposed fundamental changes which are very much in line with the proposals of the credit union movement. I recognise the work they have done for many years in my community. I have had lengthy discussions with representatives of credit unions and am very impressed by them. I look forward to a positive response from the Minister to my proposals.