Credit Union Sector: Motion (Resumed) [Private Members]

The following motion was moved by Deputy Michael McGrath on Tuesday, 24 November 2015:
That Dáil Éireann:
is concerned that the planned commencement at the end of December 2015, without amendment, of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012, and the regulations set out in Central Bank of Ireland (CBI) Consultation on Regulations for Credit Unions on commencement of the remaining sections of the 2012 Act (CP88) pose a significant threat to the competitive viability of the credit union movement across Ireland;
notes that:
— as banks close branches and restrict in-branch services, credit unions provide important competition and choice to consumers;
— predictions of a cost of up to €1 billion to support the sector have proven entirely inaccurate;
— the regulatory measures contained in CP88 were conceived at a time when the Government was convinced that significant funds would be required to support and resolve the sector;
— the recommendations of the Commission on Credit Unions have only been selectively and half-heartedly implemented to date;
— recommendations of the Commission on Credit Unions relating to the growth of the sector have largely been ignored;
— credit unions have adopted a wide range of new compliance measures over the last five years;
— 55 per cent of credit unions would be impacted by the impending €100,000 cap on member savings;
— there is up to €8 billion in un-lent deposits held by credit unions which could be utilised to stimulate the domestic economy; and
— the sector has significant potential to provide funds for mortgage lending for both social and commercial housing in Ireland;
agrees that:
— the introduction of a €100,000 limit on savings held in credit union accounts will place the sector at a significant disadvantage vis-à-vis the banks;
— the sector should not be regulated on a one-size-fits-all basis, rather a tiered regulatory approach that supports growth and development should be adopted;
— capable, larger credit unions should be allowed to offer a wider range of products and services through broader investments and lending; and
— collaboration and efficiency through shared services should be facilitated within legislation; and
calls for:
— the Minister for Finance not to commence the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 pending a full consultation process with all the stakeholders in the sector;
— an immediate and urgent review of the Report of the Commission on Credit Unions recommendations and the extent to which they have been implemented, particularly in respect of growth and development opportunities for the sector;
— a revised Regulatory Impact Analysis, including financial impact, to be undertaken by the CBI of the regulations which are proposed to be introduced at the end of 2015;
— the immediate appointment of a member of the credit union movement to the Credit Union Advisory Committee; and
— engagement by the Department of Finance and the Department of the Environment, Community and Local Government with the credit union sector to support the provision of mortgage lending by credit unions.
Debate resumed on amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"notes that:
— the Government has a clear policy to support the strategic growth and development of credit unions in Ireland as set out in the Report of the Commission on Credit Unions and its recommendations;
— the safety of members’ savings and the security of the credit union sector as a whole are priorities for this Government; the Government recognises the important role of credit unions as a volunteer co-operative movement in this country and also the importance of getting lending going in the economy;
— this Government has put in place a number of measures to ensure that credit unions can continue to provide vital services to their members and to ensure the stability of the sector into the future;
— this Government established the Commission on Credit Unions; the commission reviewed the future of the credit union movement and made recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members’ savings and financial stability;
— in particular, this Government has accepted fully the report of the Commission on Credit Unions and its recommendations; the report of the Commission on Credit Unions made a number of recommendations regarding the strengthening of the regulatory framework for credit unions; the Commission on Credit Unions also recommended that regulation making powers be delegated to the Central Bank of Ireland, CBI;
— the commission participants agreed to the recommendations; the membership of the commission included members of the credit union representative bodies and other stakeholders;
— over 60 recommendations from the report of the Commission on Credit Unions have been implemented in the Credit Union and Co-operation with Overseas Regulators Act 2012 - the 2012 Act;
— it was agreed at that time that it would be neither practical nor feasible to commence the 2012 Act in its entirety in one fell swoop; following on from that, an implementation timetable for the 2012 Act was devised in consultation with stakeholders, including credit union representative bodies;
— commencement of all sections of the 2012 Act has been aligned with the credit union financial year and the introduction of the underpinning CBI regulations, with a view to implementation of the 2012 Act in a coherent and cohesive manner; this has provided credit unions with the time necessary to ensure that the required processes and procedures are in place prior to implementation of each tranche;
— the Registrar of Credit Unions at the CBI is the independent regulator for credit unions and the setting of regulations in relation to the credit union sector, including those set out in the CBI consultation on regulations for credit unions on commencement of the remaining sections of the 2012 Act, CP88, are a matter for the registrar;
— the Registrar of Credit Unions has completed a full consultation process in relation to CP88;
— as part of the consultation process the Minister for Finance proposed that in the interests of clarity and fairness, credit unions are provided with details of the process of applying for a retention of savings above the limit amount;
— through the setting of regulations, ongoing supervision of the sector and consultation with stakeholders, the Registrar of Credit Unions acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members;
— it is the Minister for Finance’s intention to commence the remaining sections of the 2012 Act on 31 December, 2015 in line with the introduction of the regulations by the Registrar of Credit Unions; these sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the Credit Union Act 1997;
— the Minister for Finance has been informed by the Registry of Credit Unions that all credit unions have been contacted giving further information on its application criteria for the retention of savings in excess of €100,000; the Registry of Credit Unions intends to engage with the representative bodies and to invite comments from them prior to finalisation of the application process; where a credit union has demonstrated that it meets the criteria, it will be in a position to retain members’ savings in excess of €100,000 held at the commencement of the regulations;
— the CBI has also informed the Minister for Finance that it is committed to undertaking a review of the continued appropriateness of the savings limit, once the impact of the restructuring process can be assessed;
— over 99% of credit union members will not be impacted by the €100,000 cap on member savings;
— the Minister for Finance recognises the concerns of the credit union movement in relation to the savings limit of €100,000;
— the setting of the savings limit of €100,000 and other matters contained in CP88 are a matter for the Registrar of Credit Unions;
— the Minister for Finance has met with the credit union representative bodies in November 2015 and the perceived impact of the new regulations was discussed and further follow-up meetings between the Department of Finance and the representative bodies will take place this week;
— at the meeting with the movement, the Minister for Finance has asked the representative to revert with their specific concerns and has committed to communicate these concerns with the Registrar of Credit Unions;
— the need for credit unions to grow income has been recognised as a requirement for sector viability; while developing new products and services is a necessary element of this, the CBI has highlighted the importance of credit unions ensuring that they are in a position to grow their income from their traditional lending business; the CBI has informed the Minister for Finance that since 2010 it has received less than ten applications for approval of additional services under sections 48 to 52 of the Credit Union Act 1997; these applications have all been received in recent months and are currently at a various stages of the approval process;
— the CBI has informed the Minister for Finance that it has invited a number of interested parties in the credit union sector to participate in focused dialogue in November 2015 with a view to gaining a better understanding of how credit unions want to develop their business model and to identify changes that may be required to the regulatory framework to facilitate prudent development;
— credit unions are not prohibited from providing mortgages to members; mortgages are subject to the maturity limits contained in section 35(2) of the Credit Union Act 1997; the CBI issued a feedback statement on CP88 and the regulations in July; the regulations which are due to commence on 31 December 2015 contain a specific section on lending, under these lending regulations credit unions can continue to provide mortgages;
— the Government established the Credit Union Restructuring Board, ReBo; to date, ReBo has assisted with 36 mergers involving a total of 74 credit unions; in total, 189 credit unions are engaged with ReBo at varying stages of the restructuring process;
— a review of ReBo was conducted this year; the Minister for Finance announced 31 March 2016 as the final date for acceptance of any further restructuring proposals; this will enable ReBo continue to engage with the sector and complete the performance of its functions within its time-bound mandate;
— the current Credit Union Advisory Committee, CUAC, was established in September 2014 for a period of three years to advise the Minister for Finance regarding the improvement of the management of credit unions, the protection of the interests of members and any other matters the Minister may seek the advice of the committee on;
— CUAC has met with all credit union representative bodies and other stakeholders since it was established; a recent meeting was held between the CUAC and the representative bodies and the perceived impact of the new regulations was discussed;
and
— Department of Finance officials have engaged with the Department of the Environment, Community and Local Government regarding credit unions involvement in social housing initiatives; a meeting is scheduled between the two Departments to discuss credit unions involvement in social housing initiatives.”
- (Minister of State at the Department of Finance).

Deputies Seamus Healy, Finian McGrath, Paul Murphy, Tom Fleming and Mick Wallace have ten minutes, with two minutes each.

Like many Members of this House, I come from a credit union family. I have been a credit union member all my life and my dad was a founder member of Clonmel credit union. I know the value of the credit union movement throughout this country. It is a very important, volunteer-led social movement, a bottom-up, community-based, not-for-profit people's bank. It has a huge infrastructure right across the country, with 10,000 volunteers, 4,000 staff, 2.89 million members, 342 branches affiliated to the ILCU and €13 billion in assets. It is a support system for middle and low income families in every town and village.

The CP88 regulations, including the cap on savings, loan maturity limits and the regulatory reserve ratio, give rise to serious concerns for the credit union movement. The Government's one-size-fits-all approach has the potential to restrict, undermine and seriously damage confidence in the credit union movement and I appeal to the Minister not to commence these regulations but to defer their implementation into the future. To do anything else would seriously damage the credit union movement.

I also appeal to the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, to accept a credit union offer of €8 billion to tackle the housing emergency. We have 1,500 children living in hotels and hostels and 130,000 families on local authority housing waiting lists. The credit union movement has offered €8 billion to provide off-balance sheet funding to the Government to build and provide social houses. That proposal was prepared by specialist consultants and it dovetails with the core community values of the credit union movement. It has the potential to make a significant contribution to solving the housing emergency and I plead with the Minister to take up the offer.

I am grateful for the opportunity to speak on this very important debate on the role of credit unions in Irish society. I welcome this discussion and I urge the Government to listen to all sensible proposals put forward tonight and last night. As someone who was brought up in the credit union movement and is steeped in it, I was a founding member of the INTO credit union many years ago and I strongly support the 2.89 million members in the 342 credit unions affiliated to the Irish League of Credit Unions. Only last night, I met the board of our local credit union, the Marino credit union, and saw at first hand the amazing voluntary work of its members and the amount of time and support they give to the local community. I thank them and commend them for their magnificent work. They also asked me to raise a number of key points in the Dáil tonight. First, the Minister needs to support the six strategic steps policy document. Second, they are concerned at the implications of the signing of CP88 on the credit union movement and they want it deferred. Third, they want the over-regulation and bureaucracy, which are costing small branches money, to be dealt with and they are frustrated about what they cannot do. They have also put forward amazing, ground-breaking ideas to deal with social housing. They are prepared to make some €8 billion available for social housing projects and investments. They also want to deal with the microcredit issue, lending small amounts to the most vulnerable of money lenders. Finally, they are prepared to lend to small and microbusiness.

It is important the Minister and the Government listen to these sensible proposals put forward by members and supporters of the great credit union movement.

The problem with the one-size-fits-all approach of the Minister and the Government is that they are treating credit unions like financial institutions, such as banks, when they are no such thing. They are a mass movement with nearly 3 million members, democratically run, rooted in communities, based on volunteers and run not for profit but in the interests of their members.

It is worth looking back to the foundation of the credit union movement in the 1950s by working class people seeing the devastating impact of poverty and the parasitic nature of money lenders taking advantage of that poverty. That has the same relevance today with the economic crisis we are facing. The reality is that credit unions are a major force and have huge potential, with €11 billion in savings and €13 billion in assets. The movement represents a threat to the private, for-profit model of banking that has caused such misery for ordinary people right across the country. We need a publicly-owned and democratically controlled financial sector working in the interests of society and not for the profit of the few and credit unions have a vital role to play. The Anti-Austerity Alliance supports the demands of the credit union movement against the CP88 regulations which will impact negatively on the ability of credit unions to deliver for their members and for society as a whole.

The Government has pointed to a review of the €100,000 limit and a certain transition period but this is not enough as it is, at best, a stay of execution. The whole approach will hamstring credit unions and will not allow them to develop. At today's meeting of the Joint Committee on Finance, Public Expenditure and Reform and in the House yesterday, we heard praise from Government Deputies about the credit union movement. If they were serious, they would back up their verbal support with real support by supporting the call for the postponing of CP88. If it is not postponed, this should become a major election issue with all political parties forced to give their position and the credit union movement not recommending a vote for those who do not support repeal.

Families, small businesses and people of modest means could not function without the credit unions. The CP88 regulation, to be signed into law as part of the Central Bank regulations by the Minister for Finance, Deputy Noonan, by 31 December, as currently proposed, is much too restrictive. If this is not deferred and deliberated on with more thought, it will cement the restrictions and it will be up to five years before they can be reviewed, thus strangulating the huge potential of the financial, social and economic role credit unions can deliver on. Of most concern in the regulations is the carry-over of lending restrictions from 1997 which only allow for 10% of credit union loans to have a term of more than ten years. This totally restricts any customer-friendly move into larger loans for houses, etc. It also prevents customers from saving more than €100,000 with their local credit union, which is a most regressive measure. The Irish League of Credit Unions has commissioned a report to review the current structure of its organisations and the potential for change. Under a new structure, similar to that of co-operative banks across Europe, there would be more co-operation and standardisation among the ILCU's 300 credit unions, with loan decisions potentially being centralised.

As regards capital requirements, credit unions would need to have €1.3 billion in excess capital to transition to this structure but it actually exceeds that at the moment with up to €2 billion in excess capital credit. This shows the potential credit unions have and we ask for the Government's co-operation on this.

The Irish people have paid for the recapitalisation of the banks but, sadly, the banks are effectively closed to many of them. It is easy for people with lots of money to get more of it because they are considered a low risk but people who need it most find it very difficult to get it, whether it is for personal reasons or for business. Small and medium-sized businesses struggle to get money from banks today and credit unions are looking to lend to these people.

Credit unions want to lend to many people with small and medium sized businesses but are being hampered by the Government. Last year, credit unions had €5 billion available for lending but could not lend it owing to Government restrictions. As previous speakers noted, they also offered to provide several billion euro to help address the housing crisis. If the Government declines this offer, it will give rise to serious questions. For example, would the reason for such a decision be that the Government does not take the housing crisis as seriously as it pretends to take it or is it because it wishes to keep the credit unions in their place and as weak as possible to ensure they are less of a threat to the banks?

If the Minister signs the commencement order for the savings provision of the consultation paper, CP88, as she has threatened to do, a local parish Christmas thrift fund in Wexford, for example, will be unable to use its account in the credit union if its total savings exceed €100,000. This would force the fund, against its members' wishes, into the hands of the big banks, while simultaneously undermining the ability of the local credit union to serve the interests of the local community. It is a no-brainer that the credit unions deserve more support from the Government. Similarly, it is a no-brainer that we should not rely exclusively on large banks to act as a service to citizens because we know they will not do so.

I am pleased to speak on this Private Members' motion. I have been a long-time supporter of the credit union movement, which does fantastic work. Working as an accountant prior to entering the Dáil, I dealt with a range of people providing services in the credit union movement. Credit unions operate in every town, village and parish and during the difficult times when the banks were not lending, they enabled many small companies to continue to operate.

The €100,000 savings limit for credit unions will not affect the great majority of savers in credit unions. However, the Government is conscious that it will have an impact in certain cases and I expect it to take on board this issue.

The basic model under which credit unions operate must be retained. Local people build up savings in their local credit union which are then lent to other people in the community to be spent on essential services. This model must be underpinned by a solid financial structure, meaning credit unions must, in terms of their balance sheet, be solvent and profitable. In the long term, they must be also able to pay dividends to their members. In addition to these elements, the credit union movement has a significant role to play in providing funding for social housing and this issue is being addressed. The way in which loans are structured is also important. The credit union movement has emerged from a very difficult period in a much more secure position than the other financial institutions.

As a public representative in Limerick who deals with the credit union movement on the ground, I am aware of the fantastic work credit unions do. Both sides come to this welcome debate from the same position, namely, one of support for the credit union movement. While Deputies may differ on various issues, their differences can be resolved. The credit union movement represents ordinary people and is here to stay. While its voluntary spirit must be retained, credit unions must also operate with professionalism. I wish the credit union movement well and hope the difficulties and issues that have arisen can be resolved over time.

The credit union movement was founded more than 50 years ago and it is just as relevant today as it was to its founding members, particularly when considered against a backdrop of banks closing branches and limiting or increasing the cost of their services. While it is widely accepted that better supervision and regulation of all financial institutions, including credit unions, is needed, I am concerned about the impact of the commencement of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012.

I recently met representatives of a number of credit unions from my constituency and elsewhere who briefed me on the range of services and products that are available or ready to come on stream. A common perception of credit unions is that they only provide basic services, such as small loans for household appliances and holidays or to meet communion and confirmation expenses. This could not be further from the truth. While credit unions are firmly grounded in an ethos of volunteerism and service to their community, they are professionally run financial institutions with electronic and online services and are capable of providing a real alternative to the banking system that let us down so badly. They also contrast starkly with the big banks, which are becoming increasingly automated and, in many cases, unwilling to give their customers the one-to-one service they want.

It is clear that credit unions have implemented in good faith the findings of the report of the Commission on Credit Unions. They have emphasised to me that one key aspect of the report is missing, namely, the development of permissive regulation that would allow credit unions to develop what they believe to be a sound business model. Furthermore, they are calling on the Central Bank to approve the request by credit unions to provide payment account services and debit cards and to increase the limit applied to loans with a term of more than ten years to 20% of total loans and loans with a term of between five and ten years to 30% of total loans. They are also calling on the Central Bank to revert to the 1997 limits on savings which a member can hold with a credit union.

I understand it is the Minister's intention to commence the remaining section of the Act on 31 December. I encourage her and her officials to carefully consider the concerns that will be raised and the recommendations that will be made at tomorrow's meeting with credit union representatives. I recognise that a number of points of concern made by credit unions are a matter for the Registrar of Credit Unions and ask the Minister to prioritise communicating these concerns to the registrar. It should be also clarified that more than 99% of credit union members will not be affected by the €100,000 cap on savings. However, credit union members who want to lodge more than €100,000, for example, members of the Garda, ESB and teacher credit unions, should be able to do so. I look forward to the Minister's contribution.

The focus of the Government, and rightly so, has been on the credit institutions that almost brought the country to the verge of ruin. This is perfectly understandable but it is important to note that the credit unions did not bring the country to the verge of ruin. It did not emerge that there was a €1 billion black hole in the credit union movement, as the consultants who were brought in at the time estimated.

Credit unions are generally very prudently and cautiously managed. We should not apply to the credit union movement the same philosophy of regulation that applies in the Central Bank. Credit unions are not banks or credit institutions in the normal understanding of those terms. In saying this, I am not reflecting in any way on the current regulator who is, I am sure, a very professional person. However, the dereliction of conduct that we saw inside the banks in recent years was not prevalent in the credit unions.

I acknowledge that we had Newbridge, which was regrettable, but the scale of dereliction was very minor indeed.

In Ireland, we have a tendency to overreact and go from one extreme to the other. As a result of the hardship inflicted on people by the dereliction in the banks, we go from 0o to 180o. There does not appear to be an understanding of the ethos of the credit unions in the Central Bank or in its model of regulation. I remember when I brought in the Credit Union Act when I was Minister of State with responsibility for commerce in the 1990s. The first delegation we received was from Latvia, which was one of the new accession states, to look at what the credit union movement was doing for Ireland and whether it could be replicated in their country. There is no doubt that it is a precious institution in a society which spins on the basis of being able to obtain credit, which is something most people who go to work for a wage or salary have no difficulty doing whether for a car or a television. There are many people in local communities for whom credit unions are the lifeblood. There are possibilities in terms of the synergies credit unions might create with the post office network nationally in particular in a context where the banks are pulling back and do not want to engage with people.

It is not possible in the short time I have to go into the kind of detail I would like, but I note the following to the Minister of State, Deputy Simon Harris, who it seems to me is handling this matter. I speak for all sides of the House when I say that he has earned the respect of colleagues across the Chamber since he took office. It is an admiration that has been well earned. I ask him to reflect before he signs off on the points mentioned by Deputy Mary Mitchell O'Connor. This is a democratic, grassroots movement and I ask the Minister of State to engage with its members again to work out a mediated settlement before he signs the order.

I thank the Chair for the opportunity to speak on the motion tonight. The important role credit unions play throughout the country has been acknowledged on all sides of the House. There is no one in the credit union movement who does not believe we understand that importance, but there is a specific issue before us tonight and going into the future that needs to be addressed. I am sure all Deputies have received a particular document containing a report of what happened here last night and setting out some of the underlying frustrations in that regard. I cannot go through all five pages in the couple of minutes I have, but I note the main word that emerges from it is "frustration". The feeling is that while consultation has taken place, it has not been meaningful. There is a view that it has been a box-ticking exercise and something of a one-sided conversation. My only concern in that regard is that it is only last year that representatives of ReBo, the Department of Finance officials and the Central Bank appeared before the PAC. The Department of Finance officials and ReBo were very happy to engage with us on how the conversation was going and the views of the credit union movement, but that was not so much the case with the Central Bank. It was very hard to get information out of its officials and, at times, it was like pulling teeth. If that is what the League of Credit Unions faces when it deals with the Central Bank, I am concerned. If that is the case, there is a legitimate reason to ask what is going on there. It goes back to something Deputy Rabbitte said. We had light touch regulation which was not enforced ten years ago. We have swung completely the other way altogether, and not only in this instance. That is the case in many areas. People who could have got mortgages ten or 15 years ago cannot get them now. The thing is to find a balance in the middle. It is about finding a way to make this work.

Anyone who is from a rural part of the country knows what the credit union movement means to those areas. The banks have pulled out in many of those areas. If they have not pulled out, one had better be looking for €700 every time one goes into a branch of some banks or one will not be welcome. That is simply not acceptable. There is a different role for both these institutions whether it is the banks or the credit unions and it is a question of finding a happy medium. The conversation should not be about protecting the credit union movement, but about allowing it to grow further and to put down more roots. Deputy Rabbitte, who may not have been aware of my speech, said that there are possible synergies between credit unions and the post office network. These ideas are in their infancy and may not work, but surely it is time to have a conversation as to how to set up one-stop financial services in rural areas using all of these bodies together. That is what the conversation should be about. Whatever issues are coming forward tonight from the Opposition and the Government, the only way to solve this is through further meetings and dialogue. At the heart of all this is how we provide a much stronger service into the future for the credit union movement and how we work with it. That is the key. The movement is the bedrock of many of our rural communities and it is in the cities as well. Credit unions are both urban and rural. Now is the time to act. There is another meeting tomorrow and whatever stumbling blocks are in front of us should be removed because there is a bright future here. I can understand the frustrations.

I welcome the opportunity to speak. In Ireland, 342 credit unions are affiliated to the Irish League of Credit Unions. Between them, they have almost 2.9 million members, over €11 billion in savings, almost €3.5 billion in loans and €13 billion in total assets. These figures show that the credit union movement is a major economic force in Ireland. Over the past number of weeks, I have spoken with a number of credit union managers about their concerns regarding certain aspects of the proposed CP88 regulations. There is a realisation that proper regulation is needed. We all know what happened in the banking sector. As a result of little or no regulation by the previous Fianna Fáil-led Government, there was a disaster for each and every one of us. It caused enormous damage to the country. This must not be allowed to happen again. The Government has a clear policy of supporting the sustainable growth and development of credit unions in Ireland as set out in the report and recommendations of the Commission on Credit Unions. The safety of each and every member's savings and the security of the credit union sector as a whole are an absolute priority for the Government and will not be put in danger as a result of light-touch regulation. The Government is putting in place a number of measures to ensure that credit unions can continue to provide the many vital services to members and to ensure the stability of the sector into the future. These measures have included the establishment of a Commission of Credit Unions, the publication of Credit Union and Co-operation with Overseas Regulators Act 2012 and the establishment of the credit union reconstruction board, ReBo.

It has been argued that the imposition of the €100,000 cap for members' savings will cause great difficulty for credit unions and cause them to be seen as the poor relation of the banking sector. While I have some concerns in this regard, it is important to look at the real facts. The Minister for Finance has been informed by the Central Bank that the need for credit unions to take large savings from individual members has not been demonstrated under the current credit union business model to date. The average savings held by individual members is just over €3,700. The Minister has been informed that approximately 54% of credit unions currently hold individual member savings in excess of €100,000. However, the total amount of savings in excess of €100,000 in the credit union sector is approximately 1.3% of total member savings. Less than 0.12% of all credit union members have savings in excess of €100,000. As such, more than 99% of credit union members will not be impacted by this measure. The introduction of a maximum individual member savings limit of €100,000 will ensure the protection of members' savings and continue to ensure that credit union funding is significantly diversified and not dependent on a small number of members. We cannot allow a situation to develop whereby the viability of credit unions is dependent on the savings of a small number of members.

I recognise the very important role of credit unions as a volunteer co-operative movement in the State. The Government's priority has always been the protection of credit union members' savings and the financial stability of credit unions. The Government is determined to continue to support a strengthened and growing credit union movement into the future. I am a member of the Dundalk Credit Union as are all my family. We appreciate the good work it has done over the past number of years.

I welcome the opportunity to contribute to the debate and recognise the role the credit union movement has played.

Down the decades, credit unions have ensured people with no access to the major banks are facilitated to borrow. It is a social movement rather than a banking one in that it responds to a social need and has played an important role in this respect.

There are two sides to this discussion. Those on both sides are genuine in their concerns. I have discussed the situation with credit unions in Limerick, but I also understand the concern the Minister expressed. It is important that there be a meeting of minds on the development of the movement. The credit unions in Limerick told me that credit unions needed to grow their loan books and lend short-term, small, personal loans as well as large, long-term, commercial and home loans.

The credit union movement has changed since it started and forms part of a volunteerism that has contributed immensely to life in the decades since Count Plunkett established the co-operative movement almost two centuries ago. We must ensure the credit union movement's development is not inhibited in any way. The Government does not want to inhibit it, but there must be protection and I hope that discussions are being held. It is important that there be a meeting of minds on the outcome and that both sides be flexible. I urge the Minister to be flexible in the discussions. I am confident that will be the case, leading to a win-win situation. The Minister's credit union advisory committee has had comprehensive discussions with the trade unions. I hope the contribution they can bring to the debate will facilitate an improvement in the movement's future without inhibiting it in any way and will allow it to respond to the needs of and make a better contribution to a society that, like all societies, changes over time.

I welcome the opportunity to contribute to the motion. Not for the first time, I rise to address issues surrounding credit unions while focusing on the movement's key strengths, namely, its scale, its number of branches and its volunteer ethos. These elements have stood the test of time since the movement was first established as an organisation by the people for the people. The large level of trust in the credit union movement is important. As we deal with the regulators and so on, we as a Government have an important job to do in getting the balance right between ensuring we protect members' savings through adequate regulation and ensuring we do not over-regulate and hinder the positive role that credit unions might be able to play economically and socially. This balance is difficult to strike at times.

I have seen what can happen in a large town that does not have a credit union. We in Newbridge lost our credit union more than two years ago. Everyone knows the story. Without focusing on that, the time since has seen a vacuum filled by the rise of moneylenders. They have made hay through punitive interest rates. That is particularly so as we approach Christmas when parents who just want the best for their kids and do not have enough money to make ends meet opt in a moment of weakness for a small loan that turns out to be a crippling burden for the rest of the following year. As such, we in Newbridge welcome that we will have credit union services again in a few months time with the opening of a new branch in the town.

The impending announcement of the personal microcredit scheme is also important as it will allow credit unions the discretion to provide small loans quickly to people who need them to get over the hump.

We must also get the regulatory balance right at the higher end of the scale, that is, people who have a great deal of money in credit unions. There are concerns about the proposal to limit savings to €100,000 per person. It is important to note that this will have no impact on 99% of the movement's current savers and I welcome the Central Bank's commitment to consider appropriate amendments to the regulators where credit unions set out clear paths along which they wish to develop their business models. Further consultation will be key.

The development of our credit union movement is crucial. Through the consultation paper 88, CP88, process of engagement with movement stakeholders, I welcome the focus and discussion on the sector's development. The dialogue on developing card services and payment accounts is key, as we are moving towards ease of access for people and allowing credit unions to compete with the banking sector. Also important will be the dialogue on credit unions' aims in terms of longer-term lending and the provision of mortgages to members.

The post office network presents a major opportunity. Private Members' motions have addressed the strength of that network. Given that considerable synergies can be realised, I would like to see the credit union movement and the post office network working closely in this regard.

I am a member of a credit union and a family that has always supported everything that is good about the movement. At seven years of age after one's Holy Communion, one is sent off to open a credit union account. That is how society should be. In terms of social values, what the movement does financially is unique. Deputy Heydon was right in that the movement fills a gap between banks and the extortionate moneylenders who can damage people, especially when they are vulnerable at times like Christmas.

I am a member of the Joint Committee on Finance, Public Expenditure and Reform. In the past four and a half years, we have received several presentations from the credit union movement as well as from organisations involved or interested therein. The news that credit unions were hoping to get involved in social housing to the tune of more than €1 billion was a joy to behold. It is also a joy to know that most of the movement's institutions did not cause a collapse, get into trouble or do anything wrong by society. In fact, they did the opposite. They helped ordinary citizens throughout the country. Due to one or two rogue outliers, the rest may be punished a little.

I will cite a presentation given at today's meeting of the Joint Committee on Finance, Public Expenditure and Reform. It is available on the Internet to anyone who wants to read it. Mr. Ed Farrell, CEO of the Irish League of Credit Unions, ILCU, stated that it was not against regulation, only seeking better regulation. The middle ground must be worked. All Members will offer anecdotal evidence of why the movement is as prolific and fantastic as it is. It is unique and beneficial.

In terms of tiered capital and smaller deposit levels, the movement's loan-to-deposit ratio and all the other complicated factors that can be found behind the scenes in the treasury section of a bank are fantastic, but that is not what people are concerned about. Rather, they are concerned about whether they can make deposits or take out loans. Not only should credit unions expand their offering and get into electronic forms of payment and communication, but also they should move to the next level and become mortgage funders. Banks are moving away from day-to-day activity and have less so-called key man knowledge of their borrowers. In a credit union, lending is done by local people who know what is happening. They do not lend recklessly but in the best interests of their communities.

CP88 has been a problem for a long time. The Central Bank and the Department of Finance do not have the same level of tacit knowledge that we have built up as parliamentarians immersed in society and as members of credit unions.

I am of the opinion that there needs to be a focus on the grassroots. Regulators want to be able to hit a moving target in the event that there is something wrong with it. That is acceptable but it is not acceptable if it is to have a negative effect on the credit union movement. The overall rationale is to try to get credit unions to develop in a way that is best for society. That is what we are trying to nail tonight.

I welcome the opportunity to speak on this motion. Apart from some imprudent lending by a very small number of credit unions, credit unions do a magnificent job. There is a mighty group of volunteers throughout the country who ensure credit unions offer a vital service to so many people by way of lending. There are many credit unions in my county doing fantastic work. There are credit unions in Ballina, Castlebar, Westport, Swinford, Balla, Kiltimagh, Louisburg and Ballinrobe. I commend all the people involved.

From speaking to some members and staff involved in running the credit unions, I have learned that this has become a more scary time to be volunteering in a credit union because of regulation, scrutiny and a new dynamic within the banks. It has been explained to me that a traditional domain of the credit unions was giving out student loans, small loans of €1,000 or €1,500 that might be repaid within a year or year and a half. Now the banks are vying for this business. This is a little ironic considering the difficulties we have with banks lending to businesses. We want the banks to lend to businesses to get the economy moving and to have investment in growth, yet they seem to be targeting what was traditionally credit union business. The banks are depersonalising the relationship with the ordinary citizen by not wanting to accept cash valued below a certain amount. "Talk to the machine" is basically the philosophy of the banks. This is in stark contrast with the very human experience one has when one enters a credit union.

From speaking to people in credit unions, one could not but have many reservations about regulation CP88, lending restrictions, too much red tape and activity people fear will constrain their ability to develop more business. I would like to believe there will be ongoing dialogue on this because it is in all our interest that the credit unions become the success we need them to be. I acknowledge and totally understand that the motivation of the Minister and all concerned is to protect people's savings and ensure the viability of the credit unions. However, we must get the balance right. Deputy Heydon referred to this.

I very much welcome some of the good initiatives that are emerging and ongoing. One is the personal micro-credit initiative, which will mean people receiving social welfare payments will not have to go to moneylenders. One should also consider the initial discussions on post offices and shared services. We should bear in mind the examination of the idea of credit unions assisting with the provision of social housing. Credit unions are not precluded from mortgage lending but the manner in which the rules are constructed at present is surely an impediment. These issues need to be teased out further until we get the right balance.

I welcome the opportunity to contribute to this really important debate on the credit union movement. I have had an opportunity to listen to people on all sides of the House and am somewhat perplexed as to why the Government parties are dividing the House tonight. I understand they intend to call a vote against the motion we have tabled. This beggars belief given the contributions that have been made. I hope, therefore, that we will see Members break ranks with the Government tonight and support the Fianna Fáil motion.

The credit union movement is and has been an enormous enabler for hundreds of thousands of families. Its reach and impact are truly immeasurable. There is scarcely a family across the State that has not had recourse to the support of credit unions, be it to send children back to school or teenagers to college, or in respect of burials, christenings, weddings or unexpected illnesses in the family. From crisis to celebration, the credit union movement has been in place to support communities and society generally.

The credit union exists solely to support its members. Juxtapose that with the objective of the commercial financial institutions, which exist principally for the purpose of supporting and benefiting their shareholders. Profit and return on investment are the keys, while the credit union movement's activity is not for profit. Its key drivers are serving members and providing an appropriate structure to assist communities. It is not an exclusive club; anybody can join.

Without a doubt, we have come through the biggest financial crisis in the history of the State. Commercial banks were decimated. By and large, the credit union movement survived that entire period, with a couple of notable exceptions. In general, because of the management structures that were in place and the key local focus, as alluded to by Deputy Spring, and because of appropriate risk assessment, prudent lending and solid investments, the movement survived and is in a healthy position. We know the potential that exists in terms of the difference between loans and reserves. The figures are €11 billion and €3 billion.

Let us not fool ourselves here: the credit union movement cannot stand still. It is in a competitive environment and needs to serve the changing needs of its members. Lifestyles have changed and people's expectations, demands and needs change. That happens with new generations. Therefore, the credit union cannot just be restricted with all the regulations that are set out but with no potential to broaden its range of services and investments. It requires the support of the Legislature and Executive.

There is less competition in the marketplace now. We know the way banks are trying to repair their balance sheets. We all recognise that this has to be done and that it is important but, by and large, the credit unions are taking up the slack and helping people who really need help most. The credit unions' reach can now be greater, particularly because of the lack of competition. In addition to regulation, new lending opportunities and investment opportunities are needed.

The crux of this debate tonight is the necessity to give full recognition to the Commission on Credit Unions, established in 2012. The credit union movement got behind that and fed into it. The movement supports all aspects of it. The Government intends to deliver piecemeal, with all the restrictions and none of the potential for growth. The Government lacks a strategy on the potential to grow the credit unions, and it is restricting them absolutely.

Before I left my office, I had an opportunity to state on Facebook that I was coming to the Chamber to address this issue. I had a flood of responses, one of which is worth reading:

Timmy I thought the credit unions were owned by the members, it always helps for the little things that arises such as children returning to school college fees and maybe the odd home improvements. The banks wont entertain the smaller person for loans to do such things so where are they to go is it the money lenders this government wants them to go to and as for education do they not want the ordinary man [or woman] to give their children a chance to go to university. This government is a disgrace...

I appeal to the Minister to set aside the politics, accept the motion that has been tabled and support the credit unions.

In doing so, he would supporting not the institution but the people throughout this country whose lives, children and communities depend on a vibrant credit union movement that needs to grow to meet society's demands and requirements. The Minister of State would thus put in place a structure that has proved that it can withstand the kind of financial disaster we have come through.

I appeal to the Minister of State to talk to the Government Whips and avoid dividing the House tonight. It seems ridiculous to do so because it would say that the people in this Chamber are out of touch with the daily reality facing many people.

I am glad to speak on the motion. It is disappointing, however, to find ourselves here yet again trying to get the Government to understand the impact that its proposals for the remaining sections of the credit union Act 2012 will have on the credit union movement. This issue has been debated in the House on a number of previous occasions. Fianna Fáil has already tabled a Private Members' motion on the matter. Deputies across the country have been lobbied by members of local credit union movements on the impact of the proposed sections.

As we can see, there are significant numbers of people in the Visitors Gallery with an interest in the motion and in the future of the credit union movement. At various times we have debated at length what is happening in the banking sector over the last three or four years, as well as in the 2007 to 2009 period. On those occasions the Visitors Gallery was an empty place. Nobody from bank branches came along to see what was being debated. That is because the services provided by our banking sector are primarily about profit and business, whereas the role and work of the credit union movement are about providing a service to local communities. It carries out its business in a way that has the needs of the community at heart, thus ensuring that families are supported in going about their daily business. That is all part of the model that puts them at the centre, rather than trying to derive a profit for shareholders. That is why there are from 350 to 400 credit union branches across the country, with nearly 3 million members.

At a time when banks are pulling out of towns and villages, and reducing their branches across the country, credit unions are doing everything within their power to remain rooted in their communities. They are serviced and driven by local volunteers, so we want to see that model continue and thrive. However, there is real concern about the Government's proposals to enact the remaining sections of the credit union Act unamended and without taking the time to consider their impact. The Act's provisions were developed at a time, in 2011 and 2012, when the Minister for Finance expected that significant cost would be involved in resolving issues in a number of credit unions. At the time, he estimated the figure at between €500 million and €1 billion. The reality as it unfolded, however, has been entirely different. So far, a total of €35 million has been used by the Credit Union Resolution Fund, while at the same time €29 million went into the fund. Therefore the net cost to the State of resolving issues in the credit union sector has been €6.4 million. That should be compared to the €64 billion the banking sector has cost this State in having to resolve associated issues. That point should be taken on board because the credit union sector has emerged quite intact considering the challenges it faced. In light of that, the proposals contained in the 2007 Credit Union Act are unduly restrictive in not allowing or facilitating the credit union movement to grow and continue to serve communities, as it has done very well in the past.

I urge the Minister of State to take on board the substance of the motion before the House. He should ask the Minister for Finance, Deputy Noonan, to pause, engage with the sector and recognise that there are real concerns. In addition, there are dangers involved in the restrictions that will be imposed on the credit union movement if he pursues his current actions without taking their impact into account. I call on the Government parties to support this motion and recognise that we should all work together to ensure this movement continues to go from strength to strength.

I welcome the opportunity to speak in support of the motion. I genuinely believe that the motion has the full support of every Member of Dáil Éireann. I listened to several speakers and what has been said on the Government and Opposition sides is indistinguishable. Everybody is singing off the one hymn sheet in support of the credit union movement. It would be a disservice to politics, therefore, if in a short while people decided to oppose what they actually said here in the Chamber. That would be damaging to politics in public life, so I ask people to vote as they believe they should. Every member of the Government should be able to support this motion.

Credit unions are voluntary organisations employing 4,000 people, as well as 10,000 volunteers. They have a network that is unequalled anywhere by any other organisation. They are there to help with family events, car loans, home improvements or purchasing furniture. Many people at this time of year are obtaining loans to tide them over the Christmas period because there is a lot of expenditure involved. Loans may also be required when children go back to school in the autumn or when sons and daughters attend third-level colleges. That is because the grants they receive may not be sufficient to keep them in college, so there is a real risk that students may have to drop out of third-level education. I know of some people whose children would have had to pull out of courses but for the availability of a credit union loan to tide them over for a year or two.

First communions, confirmations and other events can place a big burden on low-income families. The credit union is a comfort blanket for many people. It would be a bad day's work for anybody in the Oireachtas to do anything to damage that particular safety net, so I ask people to support the motion before us.

Earlier today we had several presentations from people involved in the credit union sector, including one from Mr. Ed Farrell, the CEO of the Irish League of Credit Unions. He said that almost 3 million members have savings in excess of €11 billion and assets of over €13 billion. It is a voluntary and a visionary movement, which is what we need to see in Irish society. That is what makes it different. It is a grassroots, non-profit organisation.

One of the problems is that the credit union movement is not for profit, while the financial sector is the opposite. Consequently, the financial sector does not like organisations that are not operating to its profit agenda. This is a final move by the regulatory authorities that are doing some of the bidding of the large financial institutions, including banks. They want to squeeze out those who are eating away at their profit base. We should be resisting that.

The credit union movement was founded for a social purpose. It is unique, yet I am sure the regulatory authorities do not fully understand or appreciate it. I suspect that many of those involved in the regulatory area, and their families, have never had to go to a credit union, so they do not fully get it in simple English. Credit unions serve a broader agenda and have a number of strategies which banks could well adopt.

The major issue is that at least €8 billion is available for investment. Let us consider the position of the country. There is a shortage of social housing. I realise a pilot scheme is going ahead, but we are several years into the housing and homelessness crisis. A total of €8 billion is available but it cannot be lent for social housing. That is an example of how the country has not done a proper job in marshalling the resources available to solve the problems we have. We need to see urgent action on social housing.

We are discussing this motion because the final sections of the Credit Union and Co-operation with Overseas Regulators Act are due to commence in January 2016. The regulations will place limits on the savings credit unions can take from their members. They will also limit the type of investments they can make. I realise people will say that over 90% of people will not be affected by this, but the Government will damage the view people have of the credit union movement as a strong movement if it puts these unnecessary restrictions in place.

The people who have spoken in the Oireachtas today do not have a problem with regulation. They want good sound regulation, but not overzealous regulation. There are not against regulation; they are for it. We were addressed today by Kevin Johnson, chief executive of the Credit Union Development Association. His presentation was interesting, although there is not enough time to go through all of it. He outlined for the committee the range of business model configurations in which the credit unions would like to be involved. We all know the traditional credit union business model. It deals with low-cost loans and long-term savings. The credit unions want to transition to a business model with a broader range of savings and lending products and, ultimately, to a mature credit union movement. This would have a business model with a full retail service and a wide range of financial products. Of course, those in the banks and financial institutions will not want that because it might reduce their profitability and bonuses. They want to get back to the big salaries they had before the bust. No doubt that is where they are heading. It is important that the advice of people who have a different ethos is heeded.

We heard a presentation from Sean Hosford, chairman of the Credit Union Managers' Association. He made it clear that credit union managers support a strong regulatory framework for credit unions, as recommended by the Commission on Credit Unions. In the past three years, the credit union board of management teams have successfully introduced major regulatory changes. The relevant people in the Central Bank simply do not get it. It is easy to deal with two, three or four banks and take the approach that one size fits all. However, when dealing with hundreds of credit unions, one size does not fit all. Anyone who believes it does is showing that he does not understand the job he has been charged to do on behalf of the public in the regulatory authority.

Those representing credit unions are frustrated because they want to be involved in micro-credit or lending small sums of money to the most vulnerable people who are being pushed towards moneylenders. They are making significant sums of money available and they are keen to make these funds available for social housing, something I have mentioned. In particular, they are keen to lend to small and micro-businesses. Most people in Ireland are employed by small businesses which employ fewer than ten people. People refer to small businesses but they really mean micro-businesses that employ a small number of people. These businesses are known to the local credit unions. The people working there know who they are. In County Laois we have seen a number of amalgamations, including the credit unions in Mountrath and Durrow, St. Canice's Kilkenny Credit Union and the credit union in Portlaoise as well. That is fine. People are happy and they accept that it will make the movement stronger. The credit unions will be more professional in the way they do their business. They will have a strong presence in the towns I have mentioned. Indeed, they may have a better presence because they will have better back-up.

This week we are bringing forward a motion that is vital in the interests of the credit union movement and its members. We believe the motion represents the last realistic chance to ensure the sector can operate on a level playing pitch against the interests of the big banks. That is important. This is a business, but it is a not-for-profit business. That is what we are here to support.

I join all my colleagues in calling on the Minister to press the pause button. I recognise that at this late stage he has arranged meetings with the credit union movement, but there is no need to proceed at the beginning of January as he is planning. There is time to review these measures to ensure one size does not fit all and tiered arrangements are put in place for credit unions.

I welcome the opportunity to speak to this vital motion in support of what is a critical sector in our community. In watching the debate, I have been struck by the number of people from across parties who have come out and spoken so strongly in favour of this motion. The Opposition regularly gets criticised for bringing forward motions but everyone has been complimenting and has been supportive of this motion. In that context, I hope the Government will take on board not only what Opposition Deputies have said but also what Government backbenchers have said. One of our own backbenchers from my constituency who did not speak on the motion waged war in the local newspaper some months ago. He said he was going to go to war with the Minister for Finance because of these draconian regulations due to be signed at the end of this year. I do not know about winning the war or the battle, but I hope the Deputy does so and I hope the Minister will press the pause button. I hope the Minister will consider the serious concerns held by the 3 million members of credit unions, the 4,000 people employed in this area and the 10,000 volunteers working with the credit unions.

Another thing struck me about the debate. The former Minister, Deputy Rabbitte, spoke about greater synergies with the An Post network. That Deputy had three years sitting at the Cabinet table to bring in greater synergies and to work to support credit unions, but he did not do it. Talk is cheap, but we do not want cheap talk from any Government backbench Deputies. We want to see action. We want to see addressed what the Minister of State, Deputy Harris, referred to as the perceived impacts. This is not perception. It is a hard fact. The reality is that if the provisions are commenced at the end of the year, there will be a cap of €100,000 on the savings an individual member can lodge with credit unions. What signals does that send in terms of the feasibility and security of savings in credit unions? It sends out a negative signal. It is giving banks an unfair advantage. The new lending restrictions give the banks an unfair advantage over the credit unions. The overwhelming majority of credit unions are financially sound, compliant and ready to provide more services. It is acceptable that the measures being debated in the House were conceived at a time when the Minister for Finance, Deputy Noonan, thought it would take €1 billion to support or prop up this vital sector. It did not take a fraction of that cost. We need to get real and deal with the realities in front of us today. The credit unions provide an invaluable service in our communities. They support people where banks will not. They operate in communities where there are no other financial services or institutions. Credit unions are keen to grow, expand and provide greater services. It is regrettable that many of the proposals they have brought before the Minister and Department in recent years have not received the necessary approval to enable them to grow and provide greater services to their communities.

All we are asking is for the Minister to press the pause button, stop, reflect, negotiate and engage with the people in this sector. We can look forward then to how we can support and grow this critical sector. That is the view across all political parties. That is all we want. I call on the Minister to press the pause button and go back to the drawing board.

I welcome the opportunity to speak on behalf of credit unions, which are a trusted financial provider at the heart of many communities in this country. The recent flood of communications we have all received from members of credit unions are a very stark reflection of the great concern that currently exists. This concern surrounds the consultation paper issued by the Central Bank in November 2014, better known as CP88. It is a very pressing regulatory issue which will significantly impact on the capacity of credit unions to thrive and develop.

I listened intently to the debate yesterday, as the Minister of State, Deputy Harris, twice referred to the perceived impact of the regulatory changes contained in CP88. Dismissing the concerns of so many people involved in the credit union movement in the manner in which he did is grossly inappropriate and downright arrogant. The reason that so many letters and e-mails have flooded into the postboxes and in-boxes of Deputies of the House is not because of the perceived impact but because credit unions and their members are well aware of the true impact of CP88.

The proposal to impose a cap of €100,000 on the savings that an individual member can hold in a credit union has the potential to damage confidence severely in the sector. Credit unions are currently required to maintain a regulatory reserve ratio of not less than 10% of total assets. This crude and blunt instrument does not take account of the risks faced by the sector. A risk-weighted system, matching capital or reserve to risk, is more appropriate for the modern and progressive credit union movement.

A desire to use surplus funds for broader social based and community needs has often been expressed by credit unions. The CP88 investment regulation allows little or no breathing space for the placement or management of such funding. The rules should also allow for centralised investment for home loans, social housing and SMEs. Regulations must afford credit unions the opportunity to benefit from central investment vehicles which would improve returns and allow them to become more involved in important social projects.

It is only right that a comprehensive review is conducted on how the commission's recommendations are being implemented, and whether the legislation and regulations reflect the current needs of the 3 million credit union members. The Minister must take additional time to ensure that the knock-on effect of such regulations do not have a negative impact on the members, volunteers and staff which make up the backbone of this valuable movement. A working group, involving representatives of the industry, should immediately be initiated to examine the regulatory structure. No further red tape should be imposed on credit unions until such time as this happens. I call on the Minister to refrain from commencing CP88 while considering the recommendations made before him in this House and the Irish League of Credit Unions' six strategic steps in its vision for the future.

If properly regulated, credit unions can deliver much more for members and local communities in areas such as housing, small business and credit union facilities for the most vulnerable. Before this request is dismissed, I ask the Government to heed a message very strongly. Whatever myth exists in its mind that the credit union movement has been engaged with, listened to and properly consulted needs to be completely dispelled. The continuation of this course of regulation will ensure that the movement will wither into irrelevance and pass into history as the great movement that came and went on the island of Ireland. Is that the enduring legacy that the Minister, as a legislator, wants to come to pass for coming generations? These are the words of Mr. Brian McCrory, president of the Irish League of Credit Unions and secretary of the World Council of Credit Unions. The message was dispatched to the in-box of every Deputy earlier today and I, like every other speaker, ask the Government to step back and listen to our proposals.

Small savers and those who want small loans have benefitted from credit unions over the years and we do not want to destroy the movement; rather, we want to maintain it. It fulfils an important role which the banks currently do not, and the Government should listen to this side of the House and give us support.

I want to acknowledge all of the contributions on both sides of the House, which were constructive. Deputy Connaughton pointed out that we have to keep the conversation going and if ideas can be fed through it is important that happens. The Government has shown its commitment to the credit union movement in Ireland by establishing the Commission on Credit Unions in May 2011 to make recommendations on the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, volunteer ethos and community focus, while paying due regard to the need to protect fully members’ savings and financial stability.

The commission report was co-authored and agreed by key stakeholders, including credit union representatives. The process was a participative one, with wide representation from the credit union movement. The agreed commission report sets out the blueprint for the viability of credit unions into the future. Its constituent elements are interrelated and mutually reinforcing. The Government fully accepted all recommendations in the commission’s report which was presented to it in March 2012. Over 60 of these recommendations are contained in the Credit Union and Co-operation with Overseas Regulators Act 2012, which is the first new legislation for credit unions in 15 years.

The 2012 Act was signed into law by the President in December 2012. It was agreed at that time that it would be neither practical nor feasible to commence the 2012 Act in its entirety in one fell swoop. This has provided credit unions with the necessary time to ensure that the required processes and procedures are in place prior to the implementation of each tranche. The report of the commission on credit unions made a number of recommendations regarding the strengthening of the regulatory framework for credit unions. It also recommended that regulation making powers be delegated to the Central Bank. Therefore, it is a matter for the registrar of credit unions to make regulations and set limits for credit unions, including savings limits.

In keeping with this, the registrar of credit unions is introducing new regulations for credit unions. Regarding these regulations, it must be clear that the Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. In line with the recommendations of the commission on credit unions, and having regard to international best practice, the Central Bank conducted a consultation process in December 2013 on a proposed two-tier regulatory approach as set out in consultation paper 76, CP76.

The Central Bank stated that feedback received on CP76 indicated that the majority of respondents were of the view that a tiered regulatory approach should not be introduced at this time given the amount of change that the credit union sector is currently undergoing. Following on from this, in November 2014 the Central Bank conducted a second full consultation process in the form of consultation paper 88, CP88. A regulatory impact analysis was also conducted on the new regulations. While the proposed regulations are not of a specific tiered nature, the registrar will be provided with powers to make appropriate and timely changes to regulations where it is considered necessary.

At the current time, it is the Minister’s intention to commence the remaining sections of the 2012 Act on 31 December 2015, in line with the introduction of the regulations by the Registrar of Credit Unions. These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the 1997 Act. The Government has no role in setting regulations for a strengthened regulatory framework for credit unions.

The Minister for Finance and the Government are aware of and recognise the concerns of the credit union movement regarding the savings limit of €100,000. However, it must be reiterated that the setting of the savings limit of €100,000 is a matter for the registrar, who has stated that this measure is being introduced to ensure the protection of members’ savings and that credit union funding is sufficiently diversified and not dependent on a small number of members.

The Minister for Finance has emphasised that his officials have been in constant contact with representative bodies. He met credit union representative bodies on 12 November 2015, when the perceived impact of the new regulations was discussed. At that meeting the Minister asked credit union representatives to revert with their specific concerns and he has committed to communicate these concerns to the registrar. Further follow-up meetings between the Department of Finance and the representative bodies will take place tomorrow.

It is recognised that for a business to grow it needs to develop its business model and credit unions, while not-for-profit entities, need to grow income to ensure sector viability. When the Minister met representative bodies the week before last, they were invited to share any business model development ideas they may have to introduce new income opportunities to the sector to ensure future growth and sector viability. The Minister looks forward to receiving proposals that will support and grow income and maintain viability while protecting members’ savings.

It was mentioned by a number of Deputies yesterday that the sector has €8 billion available for investment in social housing. While my colleague, the Minister for the Environment, Community and Local Government, is primarily responsible for the formulation and implementation of policy and the preparation of legislation on housing, Department of Finance officials are scheduled to meet Department of the Environment, Community and Local Government officials later this week to discuss the proposals.

People throughout Ireland are asking why the Government is continuing to attack communities. This latest approach by the Government is impacting so heavily on the credit union movement that this is the second occasion in six months we have had to debate the issue. We have had issues with regard to libraries, courthouses, schools, post offices, Garda stations and even public health centres. There is a credit union in every community and the difference between the credit unions and the banks is the credit unions know their members and their business. The figures justify and support that and when they have stated they can deliver, they have delivered. Previous statements that it was going to cost €1 billion to bail them out of a black hole were found to be false and not the case.

In the very short period of time I have available in this debate, I want to raise an issue which I also raised in the previous debate on credit unions. A number of credit unions in my constituency in Limerick invested in products in the former Anglo Irish Bank, which became IBRC. Those investment products are being burned as part of the special liquidation of IBRC but the legislation allows the Minister to instruct the special liquidator to honour some payments. I ask again that my local credit union, Mungret, Patrickswell, Clarina and Crecora, MPCC, credit union is considered by the Minister in the context of instructing the special liquidator to honour the investments made in the former IBRC. Are we presiding over a case where the only bondholder being burned by the Government is the credit union movement? Will the Minister of State bring this to the attention of the Minister? I ask the Government to desist with regard to CP88. There is no point in the Minister of State and all of his colleagues coming into the House this evening crying crocodile tears and stating they support the credit union movement but voting down the motion. It will make people even more cynical about politics.

I welcome the many members of credit unions who are in the Gallery. They include management, staff and directors. I thank all of those who contributed to the debate and I acknowledge those who, although in the minority, have committed to support the motion and have spoken in favour of it. On proposing the motion, my colleague, Deputy Michael McGrath, elaborated on its contents. He highlighted the implications if the measures contained in the CP88 document are signed by the Minister, Deputy Noonan. Yesterday evening, before the debate started, the Minister, Deputy Noonan, left the Chamber. He is not in the Chamber this evening nor are many of his colleagues. I ask him to inform us on his absence and give us a good reason as to why it is the case. Deputy Rabbitte seemed to intimate this area is solely the responsibility of the Minister of State, Deputy Harris, but I doubt this is the case.

I note what the Minister of State stated yesterday. He and the Minister of State, Deputy McHugh, who is present, spoke on behalf of the Government and the Deputies who are party to the Government. Deputy Troy and others alluded to the fact that they spoke about the perceived implications of the measures contained in the recommendations in CP88, if signed by the Minister, Deputy Noonan.

There is nothing to be perceived about the implications for the credit union movement. What is factual is that if this goes is ahead in the form in which it has been presented, the future viability of credit unions is at risk. It goes without saying we all acknowledge, compliment, thank and congratulate the credit union movement throughout the country for the work, help and assistance it gives to communities, to such an extent that up to 70% of the population are members of credit unions. In my county, there are 35,000 members in Tullamore, 9,000 in Clara and up to 50,000 or 60,000 throughout the county. Credit unions are integral and vital parts of communities.

We know banks are withdrawing services throughout the country. We heard Deputy Mulherin speak about the difference between the atmosphere in a credit union office and that in a bank office. We see interaction, vitality and engagement in a credit union office, while we see staff in banks introducing customers to machines. Earlier this year, Ferbane in my county lost Ulster Bank, which was the last bank in town. I heard Deputy Heydon from Kildare speak about the vacuum being created by the loss of the credit union in Newbridge over the past two years. He should inform his colleagues because they will face the same vacuum in their communities in the coming years if what is proposed in CP88 is signed by the Minister.

Over the past four years, we have seen the Government stand idly by as post offices went to the wall. We have seen Garda stations closed and social welfare offices withdrawn from communities. All of this is in addition to the threat that exists that the loss of credit unions will take away whatever bit of vitality could be perceived and held in communities. We have seen no effort to address the deficit that exists in many towns and villages and no overhaul of commercial rates or dedicated plans for towns and villages.

Like many of his colleagues in Fine Gael and the Labour Party, the Minister of State, Deputy Harris, recognises the value of credit unions. He spoke of the Government's amendment to the motion, which would have us believe it addresses the concerns and fears being reiterated by members throughout the country. He accepts, of course, the commission's findings in their entirety and the independence of the registrar, but does he, and it appears that he does, accept the selective implementation of the registrar's various recommendations on this document as it is at present? He forgets, and does not acknowledge, the omission of other recommendations which might assist credit unions in helping and assisting small and medium-sized enterprises, and which may help with mortgage lending and go beyond the restrictive 10% cap being put on mortgages for more than 25 years.

The Minister of State, Deputy Harris, also stated there is provision in the amendment, and I also heard this in the contribution of the Minister of State, Deputy McHugh, for the Government to explore the possibility of an input from the credit union movement with regard to the social housing dilemma we have. What exploration is required, when a credit union has the capacity to make available through a central fund, similar to the Canadian model, funding to local communities and local authorities to build houses in their area? Yesterday, I was at a meeting at which the Department of the Environment, Community and Local Government spoke about the Estimates and looking back at the spend this year. This time last year, it made a commitment with regard to a €4 billion investment over five years, whereby there would be 7,500 new homes throughout the country this year, 4,000 of which would be new builds. The number that was built was 200, which is five per local authority. My county must have been the exception because it got eight, although this was over the past four years. The credit union movement has at its disposal investment capacity in this sector for local authorities and even a return of 2% would be far in excess of what is being received in the banks at present.

Members of the Government parties should not give us the platitudes we have heard. I will be honest, and I do not like saying this, but I am a bit worried about some of the condescending tones I heard from some of the speakers on the other side of the House. The credit union movement is professional and forward thinking, which is well capable - and more than capable as has been said by some speakers - of meeting the demands of the economy as we know them. It is much more capable when it is compared to the way in which the banks conducted their business. I heard Deputy Nolan of the Labour Party state yesterday that the debate will have very little effect. Regardless of the vote, he called for more engagement. This sentiment personifies in my mind and for my party the lack of appreciation of the ramifications of this Administration's governance.

There must be political consequences. I have met representatives of credit unions over the past number of months, including a senior delegation from the Irish League of Credit Unions, ILCU, last week, and I spoke to people in the Credit Union Development Association, CUDA, as well. It became quite apparent to me that this had to get political, as members of Fine Gael and the Labour Party, as the Government, need to accept and face the consequences of their actions. For example, when our party put in place a four-year programme to close the gap between income and expenditure, it suffered the political consequences, despite the fact that the current Government continued along that path and closed the gap by the final third necessary. That was to the Government parties' benefit but, more importantly, it was to the country's benefit. We suffered the political consequences of putting that in place, rightly or wrongly. We accepted the decision of the Irish people of putting those opposite into government and taking it from there.

The last Government capitalised Irish banks; the Irish people capitalised them. This Government told us after the June 2012 summit that there would be retrospective bank recapitalisation, as there should have been, but we doubted it was the game changer that the Government argued it was. It was a footnote at the bottom of the agreement. Instead, we have seen higher mortgage interest rates, 2% above the European average, with a bank veto on solutions proposed by customers, mass evictions, no social dividend from NAMA and €8 billion of credit union soft deposits sitting in banks ever since. Is it not gas to think that, having been saved by the Irish people, banks are now propped up by the credit unions with €8 billion of investment? The same credit unions are barred from competing in the way they can and should in the market. It is time for the members of Fine Gael to face up to the political consequences of their actions. It is time for those party members to realise the power in the hands of the Minister for Finance, Deputy Noonan, with respect to the ramifications of what they sign and when they sign it.

Many have spoken of how, earlier today, representatives of the ILCU, CUDA and the Credit Union Managers' Association came before the finance committee. There was all-party agreement, on the suggestion of Deputy Michael McGrath, that the committee should meet the registrar, and a date has been fixed for 16 December. The committee has written to the Minister, Deputy Noonan, asking him to withdraw or withhold his intention to sign CP88 at least until that meeting takes place. He claims he has passed on the concerns about the perceived implications of what is contained within it to the registrar in recent weeks, following his meeting with representatives of those bodies on 12 November. Yet, all of a sudden, he has agreed to meet representatives of the credit unions again tomorrow. That comes after hearing what we have said and what members have said throughout the country, and with Members from his party and the Labour Party reminding him of the issue.

In the likes of Offaly there are 50,000 or 60,000 credit union members and - make no mistake about it - my colleagues and I will remind each and every one about the ramifications and political consequences arising from the Government's actions if it goes ahead with this. As I said earlier, it is hiding behind necessary rectifications and controls in the way financial institutions have to be monitored. I accept that. There was scaremongering from the Minister for Finance with regard to credit unions; it was not from a consultant, as Deputy Rabbitte argued. The Minister for Finance for this State said it would take up to €1 billion to rectify the harm that might exist in credit unions, but it took only €40 million.

The Government thinks it can hide behind regulators and registrars while saying it accepts all that is contained in the commission's recommendations. It will stand idly by when the registrar selectively chooses from those recommendations and puts that under the nose of the Minister for Finance. At this eleventh hour, he still thinks there are "perceived" ramifications, but there is nothing perceived about our putting a second motion before this House. It is time to wake up and smell the coffee. It is time for the Government and its party members to realise that if they vote for this, they should not expect members of credit unions to vote for them.

Amendment put:
The Dáil divided: Tá, 67; Níl, 45.

  • Breen, Pat.
  • Burton, Joan.
  • Butler, Ray.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Creed, Michael.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Helen.
  • McFadden, Gabrielle.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Neville, Dan.
  • Noonan, Michael.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Mahony, John.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Rabbitte, Pat.
  • Ring, Michael.
  • Ryan, Brendan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Wall, Jack.

Níl

  • Adams, Gerry.
  • Aylward, Bobby.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Fleming, Sean.
  • Fleming, Tom.
  • Grealish, Noel.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Kelleher, Billy.
  • Kitt, Michael P.
  • Lowry, Michael.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLellan, Sandra.
  • Maloney, Eamonn.
  • Moynihan, Michael.
  • Murphy, Paul.
  • Ó Caoláin, Caoimhghín.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Dea, Willie.
  • Pringle, Thomas.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Barry Cowen and Michael Moynihan.
Amendment declared carried.
Question put: "That the motion, as amended, be agreed to."
The Dáil divided: Tá, 67; Níl, 45.

  • Breen, Pat.
  • Burton, Joan.
  • Butler, Ray.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Creed, Michael.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Helen.
  • McFadden, Gabrielle.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Neville, Dan.
  • Noonan, Michael.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Mahony, John.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Rabbitte, Pat.
  • Ring, Michael.
  • Ryan, Brendan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Wall, Jack.

Níl

  • Adams, Gerry.
  • Aylward, Bobby.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Fleming, Sean.
  • Fleming, Tom.
  • Grealish, Noel.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Kelleher, Billy.
  • Kitt, Michael P.
  • Lowry, Michael.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLellan, Sandra.
  • Maloney, Eamonn.
  • Moynihan, Michael.
  • Murphy, Paul.
  • Ó Caoláin, Caoimhghín.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Dea, Willie.
  • Pringle, Thomas.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Barry Cowen and Michael Moynihan.
Question declared carried.
The Dáil adjourned at 10.25 p.m. until 9.30 a.m. on Thursday, 26 November 2015.