I thank the Ceann Comhairle for selecting this matter. I am sure we can all agree on the crucial role credit unions play throughout the island and we are all anxious to protect that unique role in whatever way we can. Following the recent appointment of a special manager by the Central Bank to Newbridge Credit Union, a number of issues arise that need to be addressed.
It is to be welcomed that the members of that credit union and of others around the country reacted in a calm and measured way. We should take this opportunity to again reassure credit union members and depositors that their deposits are secure in every credit union under the deposit guarantee scheme up to the value of €100,000. It is important that we reiterate that at every opportunity.
However, it must be acknowledged that there are issues in credit unions that need to be dealt with and that is why the Commission on Credit Unions was established. Certain mistakes were made in terms of the management of credit unions, the investment policy and the extension of loans, some of which ended up in the property and development sector even though many of them were not intended for that sector at the time they were extended.
Credit unions around the country also acknowledge the need for appropriate regulation, although I believe that many of the lending restrictions that the Regulator has imposed on credit unions are excessively onerous and run contrary to the spirit of community-driven credit unions whereby local discretion is retained. The credit union manager and staff would know their customers personally and are best placed to make lending decisions rather than to work to diktat handed down by the Regulator.
We all will be aware of the contents of the interim report on credit unions, which was published in October last. It painted a fairly bleak picture of the number of credit unions that are seriously under capitalised - 27 of the total of 408 in the country. It showed that €1 billion of loans were in arrears of nine weeks or more at the end of June 2011. Almost one-in-five loans were in arrears to that extent, and that is a serious matter.
I participated in the Committee Stage debate on what became the Central Bank and Credit Institutions (Resolution) Act 2011 last year and I want to raise a number of questions in regard to that and the resolution fund. The Minister for Finance, Deputy Noonan, outlined to the Seanad in October that his estimate of the amount of money that would have to be put into credit unions was between €0.5 billion and €1 billion. I want to ask the Minister of State, Deputy Brian Hayes, whether the Government has revised that estimate based on all the information now available. Some €250 million has been made available in 2012 with provision for a further €250 million in 2013. Will that be sufficient to meet the capital needs of those credit unions that are in difficulty?
I also want to raise the issue of the level of fees being charged by the special manager at Newbridge. Given that this could be the first of a number of such special managers, there is considerable concern at the hourly rate of €432 which is being charged. Perhaps the Minister of State can clarify today who will bear that cost. Will the credit union itself pay for it or will it be paid for by the Central Bank? What are the Minister's plans in regard to invoking the special resolution fund, which is provided for under the Central Bank and Credit Institutions (Resolution) Act 2011 and when does he intend to sign regulations into law under section 15 which require financial institutions to make contributions to that fund?
I hope we will get clarity on some of these issues today because many credit unions around the country and their members want to be reassured on those points.