Dáil Éireann debate -
Tuesday, 13 Nov 2012

Vol. 782 No. 3

Credit Union Bill 2012: Second Stage (Resumed)

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

Deputy Gerald Nash

As a citizen, a member of my local credit union and a Member of this House, I very much welcome the opportunity to make a contribution to the debate on this extremely important legislation. It might be self-evident for all of us in the House, but it is no exaggeration to say that the provisions of the Bill impinge on the lives and economic prospects of hundreds of thousands of people right across the State. Its measures will have an impact on the social and economic lifeblood of hundreds of communities in this country, including the people of Louth and east Meath whom I represent.

The credit union movement is often the glue that keeps communities together. It was founded on the ethos which informs and influences my political thinking and philosophy and those of many Members of this House, namely, solidarity, fairness and equality of opportunity. I favour a description used by others which states that local credit unions are the people’s banks. When banks were inaccessible and unwelcoming places for many in my community, the credit union took on the mantle of lender and savings institution of first and often only resort for the majority of people who work for a living.

No organisation or institution has been left untouched by the economic collapse in this country. That includes a number of credit unions. There is a necessity to regulate and manage appropriately and proportionately and a requirement to ensure the highest standards of governance apply to this sector as well as to all of the other significant financial institutions active in the State. In accepting that, I am anxious to point out that the panoply of provisions contained in the legislation must be at one with the need to maintain and support the strong and unique ethos and philosophy of the credit union structure. When we emerge, as we are doing, from the economic crisis, we must be sure we do so in a way that, to coin a phrase, does not throw the baby out with the bathwater. There is a growing role to be played in developing the social economy in this country. There appears to be a fear in the credit union movement currently, as a result of the risk assessment models which will be applied and which are implicit in the Bill, that credit unions may be prevented from prudently lending to community-based companies that may, for example, have access to State funding and thus are to some extent supported by the State. From my experience I am aware that credit unions have responsibly engaged in lending processes with sporting, social and cultural institutions and would do so again because it complies with their unique ethos, modus operandi and philosophy. Crucially, it represented good business for them in many cases.

It is important to allay the concerns expressed by some across the country. I am sure the opportunity will be taken to do that. We will proceed with the legislation. Nobody should have anything to fear from it. However, concerns that prove to be legitimate and valid should be addressed. I urge the Minister to accept sensible amendments where they allow a balance between the need for a robust regulatory regime and the continuation of a successful credit union movement based on the kind of community-based philosophy that most Members of this House support.

Deputy Ann Phelan

I am grateful for the opportunity to speak on the Credit Union Bill. I am more than aware of the significant role each credit union has played and continues to play every day in communities across the country. I have been a lifelong member of a credit union.

The Bill will strengthen the regulatory framework for credit unions and provide the basis for a restructuring of the sector over time, which will protect credit union members. Such protection is of vital importance. Credit unions in this country have provided a safe and secure depository for savings of both low and middle-income families, and are a source of lending. They are for many a financial haven, one of the first places to which we turn in times of financial difficulty or hardship. As we are aware, it was the basis of communities at a time when many families and individuals were not entertained by the banks. The only place to which one could turn was the credit union.

Many credit unions had their humble beginnings in parish halls. They now have more than €15 billion in customer deposits and remain open for business. It is important this message is conveyed. It is important also to convey the message that deposits of individual credit union customers are secure, as the €100,000 deposit guarantee scheme applies also to credit unions. Therefore, individual savings are protected. One of the primary aims of the Bill must be the protection of its members.

A core recommendation of the Commission on Credit Unions was that the credit union sector should be restructured. Part 3 of the Bill deals with restructuring. Section 41 establishes a credit union restructuring board to exercise the functions assigned to it by this Part. As per section 41(3), the "ReBo" will be a body corporate with the power to sue and be sued. The creation of a restructuring board which will facilitate and implement restructuring on a voluntary basis is a welcome move. The idea that strong credit unions will be used to support restructuring is a sensible approach to what could be described as an intricate undertaking. One must also acknowledge the necessity of controls, in the public interest, on the management of credit unions. I hope the statutory governance and statutory stabilisation provisions will reflect good practice in other countries.

Credit unions have also been affected by the economic downturn in this country, although it must be noted that the degree of the problems in the sector cannot in any way be compared to those of other financial institutions. I am a great believer in the saying "If it ain't broke, don't fix it." If I were to be in any way critical of the Bill, which has been broadly accepted by the management teams of credit unions, the Irish League of Credit Unions and other interested parties, it would be in the area of regulation. One must admire the huge voluntary and civic role played by so many people right around the country in making credit unions possible. For that reason, I am delighted that the Minister, Deputy Noonan, has conferred to such an extent with the positive people in the Irish League of Credit Unions in preparing the Bill. He has acknowledged that their input is reflected in specific recommendations in the commission report, which were agreed with credit union stakeholders. However, I am concerned that the Central Bank may be too involved in the regulatory process. One of the recommendations of the Commission on Credit Unions was that the new credit union legislative framework should provide the Central Bank with powers to make regulations that set prudential controls, limits, standards and requirements for credit unions. While recognising this, we must uphold what the credit union represents at the coalface and what we could turn it into. In his statement, the Minister indicated that the regulatory requirements would be calibrated according to the "nature, scale and complexity" of credit unions, allowing for the tiered regulation approach recommended by the Commission on Credit Unions.

I commend the Minister on the provision of €500 million in support of the credit union sector. The importance of credit unions lies in the fact that they are rooted in the community. We would very much like to keep them there. We have all appreciated their hands-on approach when people go down on a Friday to seek a loan or pay a subscription. It is a private and one-to-one approach that I would like to see continued as far as possible. I commend the Bill to the House.

Deputy Catherine Murphy

I wish to share time with Deputies Maureen O'Sullivan, Thomas Pringle, Richard Boyd Barrett, Mattie McGrath and Michael Healy-Rae.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Catherine Murphy

I very much regret that there is such a heavy guillotine on the Bill, which is a sizeable legislative measure, and also that we have such a short period in which to table amendments. That could come back to bite us.

The credit union movement started in this country in the 1950s, a time very similar to now, with poverty and emigration, and a difficult time for the construction industry. It was very much a response to pawnshops and moneylending, and it fulfilled a need. Part of the reason the credit union movement has been so successful over the decades is that it was built in communities in which people knew each other. That is as much a strength as it is a weakness. I would like to see that strength at local level being knitted into our political structure, because of the trust involved. The credit union movement is a good example of this, as are the GAA and other organisations.

Although there have been failures in the movement and I have no doubt there is need for regulation, these factors pale into insignificance when the movement is compared to the so-called pillar banks. There is a demonstrated trust in the community where people live. In a survey done not long ago, people were asked what was the first payment they made. Credit union loans were preferred to loans from banks. I do not doubt there are bad loans in credit unions, even in sizeable numbers, but this response shows a respect for the movement.

I am concerned by the recommendations for governance and term limits. The implication is that there is an endless stream of volunteers. We could quickly run into serious problems because we are setting up some of the credit unions to fail. There are to be limits on the number of people and a strict regulatory regime is to be put in place. Another point at issue is the kind of authority involved. The Bill contains many instances of "shall" and "may", which will obviously be teased out on Committee Stage. It is not at all clear what role the Central Bank will play, nor how strict it will be. We must be specific in that regard if we are to be fair to the credit union movement.

I refer to the sharing of services. It is good that some services are to be shared, because that will cut costs, but some measures that could be positive, such as debit cards, cannot be shared. Such a measure could allow the credit union movement to offer real competition to the banks.

Deputy Maureen O'Sullivan

I was a member of the ASTI credit union for many years and also come from a community, East Wall, where there has been a strong credit union since 1968. There was a great tradition of savings made by parents in the community. They saved and borrowed and passed that practice on to their children, who in turn kept the tradition going. In addition, there was a great voluntary effort in the community in regard to both the work of the credit union and the work of the board. There is merit in the proverb about throwing out the baby with the bathwater. When it comes to reform and change, it is vital that we hold on to what is good and positive, that we maintain and strengthen those features and that we do not lose good practice.

One of those strengths, as borne out by my experience, is in the area of loans. Unlike the banks in the Celtic tiger years, credit unions did not give out 100% loans. According to credit union standards and regulations, loans were related to savings and there had to be a certain amount in a member's savings account before he or she was allowed to borrow money. There is an irony in the attempt to apply standards from the banks, which have been a dismal failure, to an institution which was working efficiently and which, had there not been recession and unemployment, would now be doing extremely well. Credit unions did not over-extend or get involved in banking excesses, greed or irresponsibility. They were there for their communities and have done far more than banks to create a positive awareness of saving money, even at times when people did not have much money or surplus cash. They were there to give loans that were commensurate with people's ability to repay them, a central tenet of the credit union movement. They looked after expenses such as Christmas, weddings, the house extension, the car and the holiday.

Most of the time since the founding of the movement, all of this has all gone on in an ethical and responsible way. People in communities did not go in fear and trepidation to their credit union as they did to their bank manager. Credit unions were helpful and sympathetic. A point made to me in my local credit union was that people came along in a neighbourly and sympathetic way. Today, banks are trying to do away with that personal service. Branches are closing and there is a changeover in personnel. When one goes into a bank one is directed to a machine rather than a person. Credit unions have a personal touch which must be maintained. They have definite characteristics which I hope will not be lost in the Bill.

I understand credit unions are 90% in favour of the Bill, but there are some questions. Why are we applying so much in terms of banking regulation to an institution that has been working for more than 70 years? Why are we applying secondary legislation to the credit union, which has a different ethos? I refer to the issue of shared services. Why is this limited to sharing at member level? In electronic payments, where is the risk in a prepaid debit card? Why can credit unions not use the significant amount of cash they have on deposit in the banks? They may be propping up the banks for social benefit.

Credit unions were founded on the principle of voluntarism. They placed an advertisement in newspapers today that asks "Why would you bin your most valuable asset?". Their most valuable asset is the volunteers. I am all for preventing conflicts of interest, but where is the conflict if a person who is a member of one credit union wishes to serve on the board of another? That person is not allowed to do so.

Inner-city Dublin is plagued by moneylenders who charge huge rates of interest and trap families. There are credit institutions now that offer the same rates. Credit unions are vital, and I hope their ethos and status can be maintained.

Deputy Thomas Pringle

I welcome the opportunity to contribute to the debate on the Credit Union Bill. The credit union movement is one of the largest voluntary organisations in the country. In many areas, credit unions are the only source of loan finance for many people who have difficulty accessing bank services. Many of them probably would not want to access those services in any case. There is great distrust of banks and financial institutions throughout the country, but in most cases credit unions have retained the full support of local communities because they are owned by the members, are run for their benefit and provide services to them. Banks are not there to serve their customers but to make large profits and look after their shareholders. That is the critical difference between the credit unions and the bank system.

It is a mistake to apply in this legislation the full raft of regulations from the Central Bank when there have been 70 years of regulation of the credit union sector. The legislation should recognise that this sector is different and has a different role to play in society. This role could be developed to make it stronger and even more important. What we need to develop is an alternative to the banking system. Credit unions have the potential to play that role as they are owned by and work for their communities. If we protect that ethos in legislation and in Government policy, we can ensure that we develop an alternative to the banking system - a credit union system that works on behalf of its members. In order to do that, credit unions need to be able to access the clearing system of the banks and introduce services such as debit cards and direct debits, allowing people to serve their financial needs through the credit union system.

It is crazy that while banks are closing branches throughout the country, removing services from their customers and forcing elderly people to use the so-called hole in the wall to make deposits and carry out other financial requirements, credit unions are required to lodge their funds in banks. Banks can withdraw their services safe in the knowledge that if people save money in the credit union, that money will be given to them on deposit so they can use it for whatever they want. In the past we saw how they used it to the detriment of everybody. If we allowed credit unions to access the clearing system and provide services for non-members and other legal entities, that would ensure the development of an alternative to the banking system. The banks would certainly fight this tooth and nail because they would not want to see a viable and real alternative that was in the ownership of local communities and individuals rather than under their own corporate ownership.

It would be of major service to the country if the credit union movement could be developed into such an alternative model. A third financial pillar of this nature could provide real services for real people.

I ask the Minister to consider, between now and Committee Stage, allowing credit unions to provide services for people who cannot, for whatever reason, access their own credit union. I refer to individuals who may find themselves some distance from their credit union and may wish to withdraw or lodge money. It seems nonsensical to refuse to allow people to do this.

Credit unions have loan-to-deposit ratios of 40%. In other words, only 40% of the funds held by credit unions are out on loan at any one time. Earlier today those at Bank of Ireland were patting themselves on the back because that institution is on target to reach a loan-to-deposit ratio of 130%. Rather than being used to prop up or recapitalise the banks, the money held by the credit unions could be used for community and Government-supported projects. If, for example, credit unions were allowed to invest in community wind farm projects, this would generate both a revenue stream and a return for them. Credit unions could also be allowed to invest in Government-supported and guaranteed projects. This would be of assistance in dealing with the infrastructural deficit.

Deputy Richard Boyd Barrett

The way in which the Government is dealing with the credit unions and the way this debate is being conducted is both telling and instructive, particularly when one considers how it deals with the banks, other financial institutions and the IFSC Clearing House Group. The latter ensures the policies of big for-profit financial institutions are translated, almost word for word, into Government policy.

The Bill before the House has the potential to do serious damage to the ethos of the credit union movement, which is deeply ironic. We must ask whether credit unions should be made to look more like the banks more or whether the banks should be made to resemble the credit unions more closely. Do we not need a financial system which operates much more along the lines of the model offered by credit unions rather than on the basis of the for-profit ethos of the banks and major financial institutions which caused the economic crash? Most ordinary and sensible people would say the credit union movement offers the sort of model we require.

It was not the credit unions that got us into the current crisis. They offer an alternative model for a financial and banking system, but some of the measures contained in the Bill seriously threaten to undermine their ethos. These measures will also give rise to the possibility of some credit unions either being forced to close or merge with each other. Furthermore, they will undermine the democratic principle which lies at the heart of the credit union movement.

As a result of the fact that a guillotine is being imposed on Second Stage, we do not have the time to elaborate on the issues involved. That is outrageous, particularly as we were only informed about the use of the guillotine at the last minute. The term limits being imposed by the Minister seriously threaten to undermine the volunteer basis on which credit unions are run and will be particularly detrimental to small credit unions. The prohibition on family members serving on the boards and committees of credit unions also seriously threatens to undermine the volunteer basis on which the movement operates. The move to abolish the position of treasurer will shift the balance away from members controlling credit unions and towards full-time managers doing so.

The imposition of decades' worth of banking legislation on the credit unions is a serious mistake. It is also a misapplication of the type of regulation needed for the out of control banking sector but which is not required for the very sensible and functioning credit union movement. The regulation to which I refer may well threaten to undermine that movement. Credit unions only lend approximately 40% of the money they hold. Rather than being obliged to deposit that money in the banks or send it to other countries, they want to be able to use it to finance valuable community projects. They also want to lend it to the Government in order that it might initiate job creation projects, etc. However, the credit unions are not being facilitated in this regard. As the previous speaker indicated, credit unions want provision to be made for the sharing of services in order that their members might access such services in their own credit unions but also at others throughout the country. It was promised that the legislation before the House would facilitate the sharing of services. However, it does not contain specific provisions in that regard.

There are many other issues which arise. I urge the Minister to listen to the credit unions and their members and pay heed to their ethos. Credit unions offer a model that the for-profit banks have completely failed to offer.

Deputy Mattie McGrath

I welcome the opportunity to contribute to the debate on the Credit Union Bill 2012. I object to the fact that a guillotine is being imposed on the debate on the legislation. When the previous Government was in power, those in opposition complained day in and day out about the imposition of the guillotine. The Administration has used the guillotine more than any other in my experience, although I accept that this is only my second term as a Member. The Government is running with the idea of the use of the guillotine.

There is a need for legislation to deal with the banks. Such legislation was not put in place in the past. The financial regulators were asleep on the job and subsequently went off with their rewards. Mr. Kevin Cardiff, formerly of the Department of Finance, ended up working with the European Court of Auditors.

The Minister should not throw the baby out with the bathwater. I salute the credit unions throughout the country which, in the main, are run by ordinary people on voluntary boards. The credit unions helped ordinary families to survive in the bad times before the boom. During that boom, they did not go mad and offer people 100% funding. They displayed sanity at the time. Credit unions provide people with money for their children's christenings and First Holy Communion, to help them build extensions to their homes, pay for schoolbooks, etc. I am sure that today they are offering loans to ensure many of our students can attend college because that lady, SUSI - Student Universal Support Ireland - on whom we cannot get a handle does not appear to be able to cope. The lady to whom I refer should have triplets to help her to deal with the problem. I do not intend what I am saying in this regard in a frivolous way.

We must support the credit unions. I accept that one or two may have strayed to some degree and these should be dealt with. However, we do not need to introduce a raft of legislation to drive the credit unions into the ground and kill community involvement and community initiatives. What we need is to see a return of the meitheal. People must support one another and their credit unions must support them. I appeal to the Minister to make haste slowly. Legislation is needed to deal with those whom we might term "gangsters" or "banksters". However, it is not required for the credit unions which are of good standing and doing their best. I ask the Minister to give consideration to that fact.

Deputy Michael Healy-Rae

I thank the members of the Technical Group and Deputy Mattie McGrath for sharing time. I compliment the credit union movement and the 3 million who avail of the excellent service it offers on a daily basis. Credit unions operate prudent saving and lending policies. Theirs is a vital service which is provided by the community for the community.

Despite statements to the contrary, very little real consultation has taken place with ordinary credit union activists who are now genuinely concerned about the consequences the proposed changes contained in the Bill will have for their credit unions and, more importantly, individual members. The proposals to introduce term limits and overly restrictive conditions on board membership will have major implications for recruitment of new directors in the future. There are also huge difficulties in the context of implementation of the proposed policy under which the prior approval of the Central Bank will be required for nominees going forward for election to officer positions. Further restrictions on the tenure of the chairman of a credit union, as well as additional responsibilities in the monitoring his or her fellow directors, will give rise to serious difficulties for credit unions.

The requirement being placed on credit unions to appoint remuneration committees appears to indicate that the directors of the future will be paid for their services. This will impose further costs on credit unions and sound the death knell for voluntarism within the movement. Despite the fact that directors will remain responsible for the control and direction of credit unions, the significant post of treasurer will be abolished. One would have thought that at a time when the clamour for corporate accountability and openness is deafening, the post of treasurer which provides credit union boards with the required degree of oversight and inquiry would be retained in some form. Furthermore, it is the treasurer who reports on behalf of the board on a credit union's performance to the general membership at its AGM. As a result, treasurers have a special relationship with the members of credit unions.

I salute the credit unions and hope they will be in place for a long time. They have proved to be far more sensible and prudent than the banks. If they had more to do with banking, we would not be in the mess in which we find ourselves.

An Leas-Cheann Comhairle

I call Deputy Mary Mitchell O'Connor who is sharing time with Deputies Áine Collins, Peter Mathews, Martin Heydon and Seán Kyne.

Deputy Mary Mitchell O'Connor

Imelda May has jazzed up the credit union image. The recent advertisements highlight the fact that credit unions know their customers, that they care about their needs and that they are at the centre of their communities. This is true of the credit unions in the constituency of Dún Laoghaire. The credit union movement tag line, "We look at things differently", is its main selling point. Credit unions look at their market differently; they look at profit-making differently and they look at their customers differently. Unfortunately, they, too, were affected by the economic crisis. They have experienced investment losses and an increase in bad debt losses. The Irish League of Credit Unions which represents the majority but not all credit unions had a deficit of €45.691 million in 2010, compared to a surplus of €15.394 million in 2009. The economic crisis is making it difficult for credit unions to retain their unique co-operative character. Credit unions are a vital part of the financial system. They are a distinct alternative to other providers of credit such as banks, particularly in the current financial climate. There are over 3 million credit union members in 404 credit unions. This fact, coupled with total assets of the Irish League of Credit Unions of €13.9 billion in 2010, makes regulatory reform a very important undertaking.

The Credit Union Bill acknowledges this reality. It sets out a framework for the prudential requirements to apply to credit unions. It sets out requirements for reserves, liquidity, lending and risk management. It also provides scope for Central Bank regulation of standard procedures and other more detailed matters. This must be a welcome advancement. In total, it gives effect to over 60 of the recommendations made in the final report of the Commission on Credit Unions. The commission comprised experts in the field, including the Irish League of Credit Unions, the Credit Union Development Association and the Credit Union Managers Association. They had an opportunity to voice their concerns and make recommendations. They were listened to and their expertise was drawn on, respected and utilised.

The Department of Finance also engaged in public consultation on the general scheme of the Bill. This allowed stakeholders an opportunity to make submissions to help to inform and develop the legislation In addition, the Joint committee on Finance, Public Expenditure and Reform met stakeholders to discuss the Bill, as published.

Care and consideration have been given to this important legislation because credit unions are at the centre of their communities. Credit unions are a vital financial institution for many. Credit union staff and boards do their best to better the lives of the people in their communities.

Part 2 of the Bill deals with governance issues. In my experience, all the credit unions in Dún Laoghaire-Rathdown are very professional in their conduct. However, it will be beneficial for credit unions to have proper governance rules laid down. Section 53 states directors of credit unions must be suitably qualified to undertake their role. This is a common-sense regulation.

I ask the Minister to comment or write to me on an aspect raised by a credit union in my constituency - the guidance note on investments by credit unions published in 2006. Credit unions are allowed a 24 month period in which to bring their investment portfolio exposures into compliance with the single institution exposure limit contained in the guidance note. I ask the Minister to come back to me on this aspect. The credit unions are extremely concerned that it will limit them to one or two institutions in Ireland and that they will be forced to look abroad.

Deputy Áine Collins

Recently available statistics show clearly that citizens and communities trust their credit union. They appreciate that credit unions are non-profit making, community-based organisations run by community volunteers. People who borrowed from their local credit union are making Trojan efforts to repay their loans. This demonstrates how people do not regard credit unions in the same way as they regard banks. They have not lost trust in credit unions in the same way as they have lost trust in banks. They realise credit unions are there to serve them and their communities. They know that they provide a very beneficial local service. Very often credit unions provide credit lines for people with whom the banks would not necessarily deal. Generally, the types of loans given are different from those given by the banks. During the boom years a minority of credit unions got caught up in the madness, with a few lending more money than was wise for projects that were not really within the remit of credit union lending policy. However, only a minority of credit unions behaved in this manner. The economic situation in the country was bound to affect, to a certain extent, the ability of its members to repay loans. For that reason, the Minister for Finance has committed to recapitalising the credit unions by €500 million and up to €1 billion, if necessary. In the mad noughties there was a perception that there was no end to the money available, but the credit unions have emerged relatively well. This must be considered in the context that there are 399 registered credit unions and 3 million members throughout the country. We all accept that financial regulation is necessary, but, as has been proved, credit unions are not banks and cannot and should not be treated in the same way. A credit union is a voluntary, member-owned organisation where people save and lend to each other at affordable rates of interest.

The Bill provides that the Central Bank will be the regulatory authority which will set the requirements and standards in various areas, including reserves, liquidity, lending and risk management. The Bill gives the bank the power to make regulations, but these regulations will only be made following consultation with the Minister the Finance, the Credit Union Advisory Committee and the credit union representative bodies. Therefore, the credit union movement will have a say in how the bank drafts and implements the regulations. The Bill is only the beginning of this process. In this context, it is imperative that the bank continue to recognise the uniqueness of credit unions as institutions based in communities and working for individuals living in them. The Central Bank is a key institution of the State. It must take into account the spirit in which the Oireachtas means this legislation to be interpreted, just as the Supreme Court takes account of Oireachtas debates when deciding on constitutional issues. There is a danger that because most of the bank's emphasis will, of necessity, be on regulating profit-making financial institutions, it may overlook the unique place in society and the distinct style of the credit union movement. Any regulation can only be introduced or changed over time after serious consultation and agreement with the representatives of the credit unions.

The Minister and all Members recognise the uniqueness and importance of credit unions, especially in an economy that has lost faith in the banking system. I have read the submissions from the various credit union representatives and some progress has been made in dealing with their concerns. I am confident that as the Bill passes through this and the other House more progress can be made in reconciling both sides of the argument. I am sure the final outcome will be in the best interests of credit unions and their continued valuable service to local communities. I commend the Bill to the House.

Deputy Peter Mathews

I welcome the opportunity to make a short contribution to this debate. I recognise, acknowledge and commend the contributions of the two previous speakers who are my colleagues. The credit unions have provided for the community a co-operative and mutual approach to savings and borrowings which has been invaluable. The Bill will provide a framework which has been well discussed and researched and is appropriate to the conditions that obtain in the wake of the the financial meltdown which has affected the entire economy.

I use the opportunity to read an e-mail I received from a constituent because it sets out the context and the inter-relationship where credit unions provide money, where the banks have failed in their objectives in recent years and where we are now trying to negotiate a restructuring and recalibration of the entire financial system in this country, to include a writing down of debt in order that households and families can get on with normal business and normal life. The e-mail is headed, "I voted for you but you have gone missing".

It states:

Dear Peter, the above [a link to the article referring to the €650,000 pension tab for the chief executive of bailed-out bank Bank of Ireland] is in today's paper. You stood on my doorstep during the election campaign, when I raised issues such as the above with you, you said things would be different under a [new] Fine Gael led Government after the protracted period of failure following successive Fianna Fáil administrations. Things aren't different - if anything they're worse [as a result of the legacy].

At 46, I have a meeting next Monday morning in Germany to take up a job in Chile (that's 18 hours' flight from Paris). I will leave my wife and 3 children but must do it in order to support them. This is the second time. I emigrated in 1988 after I finished University and was away for 10 years.

This country fails its sons and daughters because our elected leaders look after themselves and/or vested interests to the exclusion of those who are not on the inside. I will be an immigrant again as will many thousands of other Irish men and women when the commemorations of the 1916 rising take place in 2016. My grandfather fought in that rising, that's how close it is in time. What have we achieved in the intervening years?

Parnell stated "no man has the right to fix the boundary of a nation. No man has the right to say to his country, "Thus far shalt thou go and no further", and we have never attempted to fix the "ne plus ultra" to the progress of Ireland’s nationhood, and we never shall.

I was born in 1966, when celebrations took place to commemorate 50 years since the rising. In the intervening years we have made progress in education, in industry and in the development of our infrastructure. We [now] have 440,000 people unemployed but we can pay 6 figure pensions from current account funds to failed bankers in their fifties to pay them to walk the dog. We borrow the money to sustain the current account, ergo we borrow the money to pay the bankers that broke the banks and the economy while our young people emigrate taking the future of this country with them.

Time to find a statesman. We haven't had one for some time.

Yours sincerely,

[The constituent.]

Deputy Martin Heydon

I welcome the opportunity to speak to this much awaited Bill. I spoke last year in the House on the credit union movement, its unique place in society and the important role of voluntarism. I firmly believe that now more than ever, when so many individuals have lost faith and trust in many of the banking institutions, that the credit union movement needs to be supported and strengthened in order that it can act as a trusted alternative. This is one of the fundamental purposes of the Bill.

I note from a recent article by Mr. Kieron Brennan of the Irish League of Credit Unions that credit unions continue to welcome new members every day. More than 40,000 new members joined credit unions last year. This is a strong testament to the ethos and core values of the credit unions that we need to retain.

Obviously we all recognise that, with the €500 million the State has set aside, we must change and develop as new regulations come into force. However, while trying to set out the terms of restructuring and increased oversight of the movement, we should not lose sight of the many positives associated with the 403 credit unions in communities throughout Ireland.

I acknowledge the long process engaged in and the excellent work carried out by the Commission on Credit Unions on the recommendations of which much of the Bill is based. The process of direct engagement, consultation and surveys of stakeholders on the sensitive issues involved is an example that could be used in many other scenarios and lays a strong foundation for many of the provisions included in the Bill.

I have met representatives of the credit unions in Kildare South and taken on board many of their concerns about the changes proposed, some of which I would like to address. The tiered system of regulation is a welcome initiative, but we need to ensure the tiers are set at appropriate levels. I am aware of two very diffident credit unions in Kildare, one with 4,500 members and assets worth not much more than €10 million and another with over 20,000 members and assets worth just under €100 million. Obviously, the issues facing these two credit unions are different and any tiered regulation system would need to reflect these differences. Tiers need to be about more than asset size alone.

Like many other financial institutions, the credit unions are dealing with many more arrears cases than before and need to be given the flexibility to be able to assist their members as much as possible. We are constantly encouraging the mainstream banks to engage with those in arrears and come up with flexible solutions. Credit unions are no different. If we do not provide for this flexibility within the tried and trusted credit union model, we will inevitably drive more of those in financial difficulties into the hands of illegal and completely unregulated moneylenders.

The investment model for the credit unions needs to be addressed to allow some funds to move from short-term liquid investments. I welcome recent comments by the Minister indicating that he is open to proposals from the credit union movement on the issue of investment in schemes with a social function. I look forward to seeing these being developed.

Let me mention Newbridge Credit Union, with which the Minister is familiar. While the special manager continues to carry out his role, the members have great concerns and their frustration is increasing on foot of the lack of communication or information from the manager on the ongoing financial review process. Members who will foot the considerable cost of having the manager appointed are very anxious for an AGM to be held in order that they can receive some information and have their concerns heard - never mind the fact that they have not being paid a dividend for two years.

I welcome the commitment shown by the Government to the credit union movement with the setting aside of €500 million to address problems within the sector at a time when there are many calls on public funds. In the 1950s the founders of the credit union movement recognised the considerable difficulties and lack of confidence caused by mismanagement and the lack of money. They resolved to identify a system that would allow people to gain more control over their finances. Now, almost 60 years later, the same principles apply. There is a great need for credit unions. We need to ensure the legislation and regulatory framework created to secure their viability are particularly suited to them and allow them to continue to function as intended. I look forward to working with them and their members to ensure that this is so.

Deputy Seán Kyne

Credit unions play an extremely significant role in Irish life and have done so for over 50 years. The innovative institutions have opened up financial services to large sections of society previously ignored by banks. Figures from the World Council of Credit Unions clearly demonstrate the considerable significance of credit unions in Ireland by revealing that over 3 million citizens are members of some 500 unions across the country. This is in stark contrast with the data for Britain which show that fewer than 1 million out of a population of 60 million are members of credit unions. Inevitably, the absence of credit unions has increased social exclusion and compounded poverty and disadvantage in other countries.

As we are all too well aware, the financial and banking sector has experienced serious problems in recent years, with negative impacts in all areas of our society. A major cause of these problems has been a failure of regulation. Much work has been undertaken to rectify the regulatory shortcomings in the banking sector, with a corresponding financial investment by taxpayers.

Credit unions have, understandably, been affected by the challenging economic conditions, with some experiencing substantial falls in income and the appearance of deficits. Most will agree that circumstances have changed since the last comprehensive statutory framework was put in place in 1997. Various changes were permitted to enable credit unions offer services which were more traditionally associated with banks such as the introduction of ATM cards and the provision of mortgages for the purchasing of property. Within this context, some credit unions grew substantially in size and gradually became exposed and vulnerable to problems more traditionally associated with banks, including bad debts, arrears in repayments and so forth.

It is in the face of these issues which require urgent attention that the Credit Union Bill has been introduced. There are many positive aspects to the Bill and it must be noted that it incorporates many of the recommendations contained in the report of the Commission on Credit Unions, which recommendations included a public consultation process. The Bill will promote prudent, responsible activities in the core functions of credit unions, safeguard members' savings and promote sound, sustainable lending practices. It will provide for enhanced governance structures and independent regulation which will also protect members and bring greater stability to the sector. However, we need to realise the possible and probable impact of certain provisions of the Bill on many smaller, more community-focused and often but not exclusively rural credit unions.

I have received a number of communications, including from the Irish League of Credit Unions and local credit unions, including the Cashel-Connemara Credit Union and St. Columba's Credit Union. I met representatives of the latter some weeks ago and listened to their concerns. As many of them have been highlighted by other Deputies, I will highlight just a few. The representatives are anxious that the office of treasurer be retained in law for the purposes of ensuring the timely preparation of accounts and their presentation to the committee. Other issues include the application of Central Bank-related legislation, dating back 70 years, and the need for a memorandum of understanding between the credit unions and the Central Bank to allow for proportionate and transparent regulation. A number of other measures are suggested in the communications from a variety of credit unions that I will not highlight now, but I am sure they were forwarded to the Minister who I hope will take them on board.

While the Credit Union Bill contains many sensible provisions which will help to strengthen the sector and safeguard the many credit unions in communities across the nation, we must listen to the concerns of credit union members, staff and representative organisations. We must examine their concerns and act proportionately to ensure the Bill achieves its objectives and that it will not cause us to lose sight of the fact that credit unions are volunteer-run, member-owned organisations which provide access to financial services for all in a not-for-profit community-focused way.

Debate adjourned.