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

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

Mr. T. Kitt

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.

Mr. Deasy

I congratulate the Government, particularly the Minister on bringing this legislation before the House and also on having it published, as promised, before the end of 1996. It is extremely complex legislation containing a huge number of sections. I am sure it has given the Minister considerable headaches and that he has had even greater headaches listening to the array of speakers in recent weeks.

We must pay tribute to the wonderful work done by the voluntary workers and members of credit unions in the past 40 years. They are a credit to the nation and are one of the great success stories of modern Irish society. I am sure the Minister is straining at the leash to reply to a number of points raised during the course of the debate, many of which echo the sentiments expressed by the credit unions, which are not totally happy with the Bill even though they are glad it has at last come before the Dáil. The main amendments sought by the credit union movement are that the deposit limit be set at 2 per cent of total shares of £50,000, rather than the £20,000 proposed, and that the share limit be set at £30,000 rather than the proposed £20,000. They are the primary demands and I hope the Minister sees fit to agree to them.

The credit union movement was born in an era when people had to be thrifty with their money because they had very little of it. Another institution set up around the same time to give motorists a cheaper form of insurance is the PMPA. That was a very interesting and worthwhile concept to protect motorists from exorbitant charges by insurance companies, but unfortunately it fell into private hands and has been reconstructed as a commercial enterprise. Bodies such as the PMPA and building societies were originally set up as voluntary bodies to help poor people and give them a better deal than they received from banks, which charge exorbitant interest rates.

That leads me to ask the Minister what has happened to the third banking force which has been promised for a number of years. What alternative does the public have to the four main banks, particularly the two larger banks, Bank of Ireland and Allied Irish Bank? People frequently ask that question. I recently tabled a question to the Minister for Finance regarding the charges banks impose on customers, even though they make large profits. While I believe in competition and profit-making enterprises, there should be a limit on bank charges and the amount of profit banks make. The reply to the question I tabled stated that the Minister for Finance does not have responsibility for bank charges. In other words, it is a matter for the Central Bank. While that may be a Government agency, Members of the House do not have the power to question it on how it monitors commercial banks. We should have such power. To whom are banks answerable if not to the Minister for Finance or Members of the House? The current system is unsatisfactory.

When credit unions were first established a parallel could be drawn between them and the Morris Minor car which was regarded as the poor man's Rolls Royce. Credit unions gave less well-off people an opportunity to borrow and save money. Many people saved small sums of money with credit unions to enable them take out a loan to cover the cost of communions, confirmations or other essential items. Society has come a long way since then and, as the Morris Minor became a Japanese car in the 1970s, the credit union has increased its membership and the amount of money it disburses. The credit union movement currently has £2 billion in deposits.

We all acknowledge that the Minister of State's heart is in the right place and that he is doing good work, but is it not time restrictions were imposed on money lending and moneylenders? While it has not totally eradicated the problem, the credit union movement has gone a long way towards offsetting the awful difficulties people face when they get into the clutches of moneylenders. I occasionally meet people in my constituency with incredible financial problems because they are in the grips of moneylenders. Iris Oifigiúil, the official Government publication, states that people must apply annually for a licence to become a moneylender. The era of moneylenders is over and future applications for licences should be refused. Credit unions can do the work of moneylenders, whose exorbitant interest charges are a disgrace. Unlicensed moneylenders — an even greater scourge than licensed ones — operate in many local authority housing estates. We should cease the practice of issuing licences for money lending and do everything in our power to outlaw unlicensed moneylenders. Giving greater flexibility to credit unions would assist in that regard. Their wonderful work has already gone a long way towards abolishing the need for moneylenders.

As we owe a debt of gratitude to the credit union movement, we should be prepared to compromise in regard to its requests. The Minister of State is a flexible and brilliant individual and I am sure he will be accommodating on Committee Stage. While I accept he does not want credit unions to become banks or building societies, for many people that is what they are. They do excellent work for the community. I wish the credit union movement well in the future and hope it can reach an accommodation with the Minister of State on the matters in dispute.

Mr. O'Leary

I compliment the Minister of State on introducing this Bill. While Fianna Fáil will table amendments on Committee Stage, we are pleased the legislation on credit unions is being updated.

More than 12,000 people work voluntarily in credit unions to help the less well-off sections of society. The credit union movement could be compared to a large co-operative organisation and its members cannot be given enough credit. They do tremendous work for those who want to place small amounts of money on deposit or borrow for essential purposes. Rigid controls apply to the operations of the movement to ensure a minimum number of misdemeanours.

The credit union movement is concerned about a number of key issues. The limits on shares, deposits and loans are unacceptable to it. The Bill proposes to set a limit of £20,000 on shares, but the credit union movement wants that increased to £30,000. The Bill proposes a limit of £20,000 on deposits, but the movement wants that increased to 2 per cent of total shares or £50,000. The Bill proposes a limit of £20,000 on loans, but the movement wants that increased to 5 per cent of total assets or £30,000. A solution which raises the monetary limits without allowing for those percentages will not be acceptable and for good reason.

As regards self-regulation, recognition of the credit union movement by the insertion of a provision similar to section 94 of the Central Bank Act, 1989, will provide for supervision of its affiliated members by the Irish League of Credit Unions within the framework established by the registrar. An approval system for new services will be tiered to recognise the varying types of services which could be provided by credit unions, to enable single approval applications for all affiliated existing services to be automatically approved, and for fast-tracking of approval, especially for agency services.

My colleague, Deputy Tom Kitt, referred to offences and penalties. I spoke to many members of the credit union movement who were anxious that sections relating to offences and penalties be consolidated in one part of the Bill.

The vision of the credit union movement is that it should satisfy the social and economic needs of its members with dignity and integrity by offering, in a co-operative way and on a non-profit basis, full financial services for those who wish to join. This ambition, which embodies the philosophy and ethos of the movement, is not recognised in the 1996 Bill. Many features of this legislation will hinder the development of the credit unions and may damage the ethos of the movement and frustrate the work of 12,000 volunteers who demonstrate the value of a co-operative, self-help approach to economic development in their communities. Economic development is vital to these communities and anything which hinders such development is bad.

The movement has identified a number of fundamental issues. When looking at these issues it is important to remember that the credit union movement represents 427 credit unions which vary in size with assets ranging from less than £0.5 million to £55 million. This diversity is an indication of the strength and the representative nature of the movement which should not be threatened. I am worried that many of the proposals here represent a threat to the unity of the movement.

Limits unacceptable to the leaders of the credit union movement have been set on shares and deposits. Under the 1966 Act, a limit of £6,000 was set on shares. It has been increased to £20,000 under this legislation but the credit union movement seeks an increase to £30,000. There was no monetary limit on deposits under the 1996 Act, but this Bill imposes a limit of £20,000. The credit union movement seeks a limit of 2 per cent of total shares or £50,000, whichever is the greater.

While the bulk of savings in credit unions are held by small savers — the average saving is £1,300 — some people have savings in excess of £40,000. Indeed, there are 68 credit unions in which members have savings in this category. Any unnecessary restriction on the ability of a credit union to raise funds from members will impede the growth of the movement. In practical terms, the proposed limits mean that in certain circumstances, a credit union may have to turn away a member who wishes to place funds.

Setting a monetary cap on members' deposits rather than relating it to the total shares in the credit union does not recognise the diversity of credit unions or allow for flexibility depending on the size of a credit union. It is fundamentally important that the limit set on deposits reflects a percentage of the credit union's shares and is not an absolute monetary limit. We must bear in mind that present credit union legislation does not have a limit on deposits. This has not caused problems, so why is this change being introduced?

The 1966 Act limits credit union loans to a term not exceeding five years. This limit will be relaxed in the 1996 Bill so that 20 per cent of loans may be for a period exceeding five years and 10 per cent for a period exceeding ten years. With this welcome relaxation in terms has come an unwelcome limit on loans. A limit was not set under the 1966 Act but under the 1996 Bill, a limit of £20,000 has been set. The credit union movement seeks a limit of 5 per cent of total assets or £30,000, whichever is the greater.

While the vast majority of credit union loans are for small amounts for a short duration, there is a substantial market for credit union loans in excess of £20,000. People with small savings often build houses with help from the credit union and save taxpayers, rate payers and county councils the cost of building local authority houses. This alone is a good reason to reconsider the limit. At present, 132 credit unions have loans in this category. Given the potential growth in loan demand as a result of the extension in loan terms, it is probably more appropriate to consider the present number of loans in the £10,000 to £20,000 category which are given by 293 credit unions. It is clear the demand for loans in excess of £20,000 will increase.

An absolute monetary limit on the value of individual loans will seriously impede the development potential of credit unions, particularly the 81 larger credit unions, which would be seriously affected by this cap. A limit on loans will only serve to discourage investment in a credit union because members will be less inclined to invest if a borrowing facility, even to the level of their savings, is not available. Given the diversity in size and lending capacity of credit unions, it is logical, and serves prudential objectives, to set any such limit as a percentage of total assets. The existing limit on loans is 10 per cent of total assets with no monetary limit. This has not caused problems in the past, so what is the reason for the change? I do not understand the thinking behind it.

The proposed monetary limits on savings and loans are unacceptable to the credit union movement. A compromise solution whereby the monetary limits only would be raised would be unacceptable as it would impede the development of credit unions and might divide the movement with larger credit unions in particular seeking a different legal framework within which to operate.

All credit unions operate under rules approved by the Registrar of Friendly Societies. For 38 years credit unions affiliated to the Irish League of Credit Unions have been subject to self-supervision under a comprehensive self-regulatory system operated centrally by the league through the management of the savings protection scheme which has strict rules and which was introduced voluntarily in 1989. It currently holds £28.7 million, representing 1.2 per cent of total savings, exceeding the recognised norm for credit unions worldwide and far in excess of the figure of 0.2 per cent for the deposit guarantee scheme operated by the commercial financial institutions.

The rules of the scheme lay down prudential management procedures, standards and ratios which must be adhered to and require a credit union to have a fidelity bond for all of its employees and volunteers. Credit unions are inspected by the league's monitoring division at least once every 15 months. In 1996, 317 credit unions were inspected.

The scheme protects members' savings in a number of ways. There are total movement reserves of £290 million, representing 12 per cent of total savings; fidelity insurance cover related to assets; internal supervision; external annual audits; computer monitoring of financial performance and field inspections; and monitoring and investigations by the league.

Although the Minister of State recognised its role in presiding over and guiding the extraordinary growth of the credit union movement, recognition is not extended in the Bill to the Irish League of Credit Unions which is the central controlling, servicing and representative body for credit unions. It has proposed that a section be inserted, reflecting section 94 of the Central Bank Act, 1989, to allow recognition by the Registrar of Friendly Societies and to provide for supervision of its affiliated members within the regulatory framework established by the registrar.

While section 48 allows credit unions to provide additional services to their members, the system under which services will be approved is cumbersome and of significant concern to the movement. Many credit unions provide, on an agency basis, services other than savings and loan accounts consistent with their objectives. These include insurance services, saving stamps, budget accounts-bill payment, money advice services and foreign exchange. The introduction of additional services could be severely hampered by delays in issuing approval. In a fast moving personal financial services sector, this would inhibit the ability of credit unions to respond to their members' needs.

There are repeated references to offences and penalties in relation to almost every credit union activity. While the credit union movement accepts the need for offence and penalty provisions, the Minister of State should consider bringing all of these together in one section.

Amendments must be made to the Bill to ensure it is workable and an effective legislative framework for this vibrant, community-based, non-profit, member-owned and controlled, mutual, co-operative and highly successful movement. It should be amended along the lines suggested.

Mr. H. Byrne

I am pleased to have this opportunity to speak to the Bill. It is evident from the number of backbenchers who wish to contribute to the debate that the credit union movement is held in high regard throughout the country.

Last week, at its invitation, I visited the new custom built offices of New Ross Credit Union. I heard it said recently that the credit unions were becoming like the banks and other lending institutions in that they were building monuments to themselves in various towns. I reject this. They are to be commended for providing such fine facilities. I was well briefed in a professional manner by the persons concerned. I hope I can do them justice. While they welcomed the Bill, they were of the view that it had its shortcomings.

Later that day I visited a businessman in New Ross who wished to brief me on a £9 million development at the Hook in County Wexford. On hearing that I had come from New Ross Credit Union, he informed me that he had cut his teeth with it. This is a clear indication of the success of the credit union movement.

My colleague on the opposite side of the House, Deputy Deasy, raised the issue of the third banking force, of which Democratic Left and the Labour Party are in favour. It is disappointing that so little progress has been made. I am sure the Minister of State, who holds a prominent place at the Cabinet table and expressed a particular interest in the matter when on this side of the House, will clarify the matter.

There are seven credit unions in my constituency of Wexford: New Ross, Gorey, Enniscorthy, Wexford, Cleristown, Piercetown and Bunclody. This is clear evidence that it is a rural and urban based organisation accommodating much of the diversity of the population of the county and I am sure this is repeated throughout the 32 counties. Despite members of my family being involved, I was surprised to learn that there are £26 million in savings in County Wexford and that 37,000 members are involved which is over one third of the population of the county. That reflects well on the organisation and on the wonderful work it has done which should never be forgotten. I would not like to suggest the Bill loses sight of that but it goes too far in many instances.

This Bill presents an opportunity to do a good job and meet the demands of the credit union movement. However, there are elements in the Bill which are not good. If I quote often enough from the briefing document of the Irish League of Credit Unions, as many others have done, the Minister of State may be convinced of the necessity to amend it.

The credit union movement, unlike the banks, is flexible. When one applies to it for a loan, one does not expect to receive the same negative answer one expects from a bank. The movement is successful because there are no fools among its officers. No member has ever lost money. Members own the credit union and dictate policy through the voluntary directors. Any surplus is returned to members by way of dividends or interest rebates. Many small businesses have been started and sustained by the credit union, for example, light engineering companies, garages, joineries and shops. The credit union has left its imprint and has been effective. The amount of savings can be as low as 50p per week. A Christmas savings scheme is also operated within the credit union.

This raises the issue of moneylenders, also raised by my colleague, Deputy Deasy. They no longer provide a necessary service. I am inclined to agree with the strong line taken by Deputy Deasy that there should be a long, hard look at the issue when their licences come up for renewal. The comparison between the interest charged by moneylenders and that charged by credit unions is frightening. Moneylenders are legalised extortionists. When the time comes for their licences to be renewed, they should be refused as their services are no longer required.

People will often go to a TD's clinic looking for money from the county council to build a house or to install windows or central heating. If it cannot be obtained, I guide them towards the credit unions but, if they cannot get it there, they visit moneylenders. When they are caught in their clutches, they must take out a loan to cover the original one and a third loan to cover the first two and this continues until such time as these people are in serious trouble. The credit union has taken many people out of the clutches of moneylenders. We, as a parliament, should take a more serious view of the terrible difficulties people find themselves in because of the intimidatory tactics of these people. How many times has a housewife come to our clinics in tears because of intimidation by moneylenders who stated that unless she paid the money due at the end of the week they would inform her husband? It is disgraceful. The credit unions can help in such a situation and we should encourage them to do so.

I have met many local boards of directors, not alone in New Ross but all over County Wexford and many from neighbouring counties as well. They are all excellent people with common sense who operate in a professional manner. We should not interfere with the local boards of voluntary directors. I often wonder if voluntary people are more committed to an organisation than those who are paid. It is an interesting point which we should consider. No one should be in any doubt that these boards of directors with their excellent staff — many people in the credit union movement are paid officers — provide a fantastic and social service.

The strongest message from the credit union movement is that control is being taken from it. This is a worry and, if the fine print in the Bill is examined, one could be forgiven for having that suspicion. It was suggested to me that there is a smell of the banks about it. I know the Minister of State's feelings about banks and I wonder if his erstwhile enemies are becoming friends. I worry he is being taken in. His performance in the past would suggest this would never happen but then I never thought I would see him on the Government side of the House either. With the third banking force in the offing and this little hint of control being taken away from a successful organisation, I reprimand the Minister of State by saying I am a little worried. If those involved in the organisation tell me they are worried, I have no reason to believe otherwise. The Irish League of Credit Unions extends to all 32 counties and people of all religious denominations and political convictions are members and are on boards. If organisations adopted a similar attitude to that of the credit union movement they could contribute to the successful resolution of political differences here.

A fine aspect of the movement is it operates its own inspection scheme, with which we should not interfere. A credit union may be inspected at any time without warning. We must be careful not to do away with that inspection system in this successful movement. I note the Minister of State is in agreement.

It is often perceived, although I do not know where the idea originated, that politicians are the best off people in the world. However, we have to approach banks to secure loans. I have some land, but the bank manager has refused my requests on more than one occasion. Many people have no chance of securing a loan from the bank, but they can get one from a credit union. Accessibility to credit unions must be nurtured and encouraged. That must be reflected in the Bill.

The vision of the Irish League of Credit Unions is that credit unions will satisfy the social and economic needs of their members with dignity and integrity by offering, in a co-operative manner and on a not-for-profit basis, full financial services for everyone in the community who wishes to join. Many of us have taken issue with banks because of their very high profits. We recall they gave loans to many people, particularly to those in rural areas, in the early 1980s and increased their interest rates to almost those charged by moneylenders. That hike in interest rates forced many people to sell their properties and remortgage their houses, but that would not happen in the case of credit unions. We must ensure that will remain the position.

The Irish League of Credit Unions' vision which embodies the philosophy and ethos of the movement is undermined by this Bill. Many of its features will hinder the development of credit unions, damage the ethos of the movement and frustrate the 12,000 volunteers who demonstrate the value of the co-operative self-help approach to economic development in their communities. Those volunteers are important people in their communities — their involvement does not extend only to the credit union movement. That was evident on Tuesday when I went to the funeral of one of the credit union collectors in my area which was attended by a large number of people involved in the movement throughout the country. That man was well respected because of his involvement in the movement.

The movement identified a number of fundamental issues as paramount. In considering them it is important to bear in mind that the credit union movement represents 427 credit unions in rural and urban areas, with assets varying in size from £0.5 million to £55 million. That diversity is an indication of the strength and representative nature of the movement and should not be threatened. We are worried that many of the proposed solutions pose a threat to the unity of the movement. I know from consultations with many of those involved that they feel strongly about that. I do not believe the Minister of State intended to cause that concern, but he should give this matter serious consideration. In doing so he will be able to say when he leaves office in the not too distant future that the Credit Union Bill is a monument to him; he put his stamp on it, listened to the views expressed by those involved in the movement and amended the Bill to ensure the organisation continues to grow and retains its ethos.

Mr. Rabbitte

My sentiments exactly.

Mr. Kirk

I thank the Chair for the opportunity to contribute to the debate. This Bill, which was long promised and awaited, is one of the most important to come before the House. In recent months our support has been sought and we have been lobbied to introduce the Bill and consider proposals in respect of specific provisions.

The credit union movement plays an important role in the economic and social well-being of many people. I was surprised to learn from some of the briefing material that the membership of the movement is so high. Based on those statistics one wonders how there is any business for the more commercial financial institutions. The credit union movement is community based and owned and run by members. Its culture and ethos are tailor-made to the needs of this country.

This legislation will define how the movement develops in the future. Because of the many misgivings expressed about the Bill, one must question if it will put the movement into a straitjacket. Will the movement's role, importance and the significance of its objectives be lost sight of in our changing environment?

The monetary limits proposed are unnecessary and unwise. Anyone with the most basic information about the movement will realise there is a great variation in the size of credit unions. Of the 427 in the country, their assets base varies from £0.5 million to £55 million, but the limits proposed will apply to the spectrum of credit unions. It is crude and will be ineffective. It will restrict the movement's ability to develop and expand.

The briefing material states that 68 credit unions have individual deposits in excess of £40,000. Because of the limits that will apply to shares and deposits when the Bill is enacted, to where will those deposits be transferred? Will the movement be prohibited from catering for depositors who have accumulated that level of savings through their hard work and thrift? The impact of the Minister of State's proposal will result in members withdrawing their savings and investing them elsewhere. There does not seem to be a problem with the amount of deposits under current legislation.

On the exclusion from the house mortgage market, the Minister humorously said £20,000 would not build a decent conservatory.

Debate adjourned.

Dáil Éireann debate - Thursday, 6 Mar 1997