Credit Union Restructuring Board (Dissolution) Bill 2019: Second Stage

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

This Bill gives effect to the dissolution of the Credit Union Restructuring Board. In summary, the Bill provides for the dissolution of the Credit Union Restructuring Board, the transfer of certain functions of the Credit Union Restructuring Board to the Minister for Finance and makes the relevant amendments to the Credit Union and Co-operation with Overseas Regulators Act 2012.

I will give some background on the establishment of the Credit Union Restructuring Board. Further to the 2011 to 2016 programme for Government, the Government established a Commission on Credit Unions. A core recommendation of that commission in its 2012 report was that the sector should be restructured on a voluntary, incentivised and time-bound basis. It was further recommended that a new body, the Credit Union Restructuring Board, or ReBo, should be established on a short-term basis to engage with credit unions and to oversee and facilitate the restructuring and amalgamations of credit unions. ReBo was established on an administrative basis in August 2012 and it was put on a statutory footing on enactment of section 42 of the Credit Union and Co-operation with Overseas Regulators Act 2012 on 1 January 2013.

Part 3 of the Credit Union and Co-operation with Overseas Regulators Act 2012 provides the legal foundation for the restructuring process, including the establishment of ReBo on a time-bound basis and the dissolution of ReBo on the completion of its work under section 43 of the 2012 Act. When the Minister is satisfied that ReBo has completed the performance of its functions under Part 3 of the 2012 Act, he can then dissolve ReBo.

The Minister carried out two section 43 interim reviews, the first in 2015 and the second in 2016. There was also a final section 43 review in June 2017. The second interim review, in October 2016, recommended that ReBo be given until 31 March 2017 to complete any outstanding restructuring projects and then be wound down in an orderly fashion. The purpose of the final section 43 review in June 2017 was to assess the work of ReBo over its lifetime to determine whether its work was complete.

Taking account of each aspect of ReBo's functions, and following due consideration, examination and detailed analysis of its work, the final review in June 2017, under section 43(2)(b) of the 2012 Act, concluded that ReBo had completed the performance of its functions to the highest standards and an orderly wind down of ReBo’s operations was recommended. In addition, ReBo completed its restructuring work with a minimal call on Exchequer resources compared with original expectations.

I will briefly outline the extent and manner of ReBo’s work during its short lifetime. ReBo was led by its chairman, Mr. Bobby McVeigh, and its board members included members from the main credit union representative bodies, including the Irish League of Credit Unions, the Credit Union Development Association and the Credit Union Management Association, a Central Bank non-voting member, a Department representative and independent members appointed by the Minister for Finance. ReBo staff were employed on fixed-term contracts, which expired on or before 31 July 2017.

ReBo's role was to plan for the restructuring of the credit union sector, engage with and assist credit unions in the preparation of their restructuring plans, consider and decide on restructuring plans submitted to it by credit unions, oversee the implementation of restructuring plans, including the provision of post-restructuring support, and oversee the operational functions of ReBo. Following on from ReBo's role in the restructuring process, the Commission on Credit Unions recommended that any restructuring proposals must have the endorsement of the ReBo board before being submitted to the Central Bank for regulatory approval. Funding requirements should be determined based on the credit union assessments and funding should be provided from one of three sources in the following order: excess capital from within participating credit unions; the sector itself; or Exchequer funding on a recoupable basis.

The final date for restructuring was initially 31 December 2015, but that was extended to 31 March 2016 following the interim section 43 review of ReBo's work in 2015. After that date, no further restructuring proposals could be accepted by ReBo. In March 2017, ReBo completed the performance of its functions in accordance with the 2012 Act. While some 210 credit unions were involved in 117 potential restructuring projects, at the end of its operational life ReBo had facilitated and overseen the full restructuring of 156 credit unions in 24 counties under 82 projects with assets of almost €6 billion. This equates to approximately 38% of total credit union assets at that time. Some of the uncompleted projects were handed to the Central Bank for further consideration.

The Government provided €250 million in the credit union fund that was established specifically for credit union restructuring. Half of ReBo's administration costs were met from the credit union fund and were met by way of a ReBo levy on the credit union sector. Under the 2012 Act, ReBo could, with the Minister's consent, make regulations prescribing a levy to be paid to it by credit unions and when such a levy would fall due to be paid. In 2014, 2015, 2016 and 2017, ReBo made regulations requiring credit unions to make a contribution towards ReBo's operating costs.

To its great credit, and to the credit of the sector itself, of the €250 million provided to the credit union fund, all but €11.6 million was returned to the Exchequer in 2018. The lower than anticipated spending on restructuring was essentially because the majority of credit unions participating in restructuring projects financed those projects from within their own resources. Where there was a shortfall, financial assistance was provided in certain cases by the Irish League of Credit Unions using its savings protection scheme. Combined, this resulted in a much lower cost to the Exchequer than anticipated by the original commission.

As I mentioned, some of ReBo's uncompleted projects were handed to the Central Bank. In addition to those projects, new restructuring projects have commenced directly with the Central Bank. When ReBo ceased accepting new applications for assistance, the Registry of Credit Unions issued a circular and explanatory note to all credit unions advising interested credit unions to engage directly with the Registry of Credit Unions. The Registry of Credit Unions also updated the credit union handbook to include information on the restructuring process. While restructuring has continued post ReBo, the pace has slowed somewhat with a total of 57 transfer of engagements confirmed: 19 in 2017, 15 in 2018, 12 in 2019 and 11 in 2020 to date. I am informed that nine transfers of engagements are currently under way.

Completing 82 projects involving 156 credit unions across 24 counties was a huge achievement for ReBo, particularly in such a tight timeframe. It is commendable that the credit union movement provided financial support from within its own resources and minimised the call on Exchequer funding.

Following the resignation of the board on 31 July 2017, a caretaker board comprising two Department of Finance officials and an existing director, the Central Bank-nominated non-voting director, has been appointed in order to meet the requirements of the 2012 Act. The caretaker board must remain in place until ReBo is dissolved via this Bill.

I look forward to hearing the views of Senators in the course of the debate on the Bill, which provides for the dissolution of ReBo, the transfer certain functions of the Credit Union Restructuring Board to the Minister for Finance, the amendment of the Credit Union and Co-operation with Overseas Regulators Act 2012 and the consequential amendment of other enactments. I commend the Bill to the Seanad.

I welcome the Minister of State to the House. Cuirim fáilte roimh an deis cúpla focal a rá maidir leis an mBille um an mBord um Athstruchtúrú Comhar Creidmheasa (Díscaoileadh), 2019. Tá a fhios ag chuile dhuine an obair thábhachtach a dhéanann na comhair chreidmheasa i chuile chontae trasna na tíre. Tá sé fíorthábhachtach do dhaoine go bhfuil na comhair chreidmheasa ag obair ar son na bpobal sin.

I welcome the Bill to dissolve the legal entity of the restructuring board and to transfer assets and liabilities to the Minister for Finance. The restructuring board was given an important job to do, that job has now been completed successfully and, hence, we can progress with the dissolution of the board. This is a technical Bill to give effect to that dissolution. I note that one year after dissolution the Minister shall arrange for the accounts to be filed. Has he any idea at this stage what those accounts might tell us in terms of assets and, hopefully, not liabilities to the State?

In regard to ReBo, he also mentioned the post-structuring support. I note he stated that while restructuring has continued post ReBo the paced has slowed somewhat. While this was before the Minister of State's time in office, were we too hasty in dissolving this entity in 2017 and should we have continued on and allowed for a greater level of restructuring? I know that date was set in the original legislation and employees got contracts up to that date. They were obviously doing exceptional work but, as the Minister of State said, the pace has slowed somewhat.

Is the Minister of State happy that all the restructured credit unions are operating to their fullest potential in every county and community in which they operate? We all know credit unions provide a vital local service to the communities they serve. Often the community, as in my own area, can be across a large swathe of countryside. The credit union is a community-based structure and organisation. It is not driven by profit. Like any company, it has to achieve a profit but it is driven for its members’ needs. If there are dividends they would be returned to members.

Credit unions are extremely important in reducing the use of the scourge of moneylenders. They are a vital provider of small loans, whether it be for home improvements, the purchase of a kitchen appliance or some other purchase. That local service the movement provides is very important.

As a result of the scaling up of many credit unions, the amalgamation of a number of credit unions or one credit union taking control of or subsuming a number of smaller credit unions, they have been able to get into areas such as the mortgage business. That is only possible because of the restructuring and renewal by ReBo.

The Minister of State mentioned the €250 million provided to the credit union fund and all but approximately €11.6 million was returned to the Exchequer in late 2018. Does that mean it was not drawn down or was it drawn down and repaid? I note ReBo was able to recoup some of the costs in terms of levies to credit unions.

This is a technical Bill on a very important sector. I would like to recognise the role of the late John Hume in the establishment of the credit union movement. He travelled the length and breadth of this country encouraging the establishment of credit unions. The credit union movement is down to the strength of his testament, work and vision.

As there is no one from the Independent group, I call Senator Casey.

I welcome the Minister of State back to the House. We have seen him a lot lately and perhaps we will be seeing much more of him in the future. As he will know, we will be supporting this Bill, which has been brought forward by the Government to dissolve the Credit Union Restructuring Board, or ReBo as it has been deemed, because it has fulfilled its purpose.

ReBo was established on a statutory basis in January 2013 as a body responsible for facilitating and overseeing the restructuring of credit unions to support their financial and long-term stability. The commission recommended that the restructuring be carried out on a voluntary, incentivised and timebound basis. In line with the commission's recommendation, the restructuring process has been carried out within a clear timeframe.

In its short lifetime, ReBo oversaw the facilitation of 82 restructuring projects, involving 156 credit unions with assets totalling €6 billion, across the Twenty-six Counties. It completed its restructuring work with a minimum call on the Exchequer resources. While €250 million of Exchequer funding was provided to facilitate ReBo's restructuring work, the cost to the Exchequer amounted to approximately €11.6 million, with the credit union movement providing much of the funding from its own resources, thus minimising the requirement for the Exchequer funding.

It is interesting to note that in 2011, it was indicated in this Chamber that the cost of resecuring the credit union sector would be up to €1 billion. Thankfully, that proved to be very wide of the mark. That is not to downplay the significant issues experienced by a small number of credit unions. The State had to rescue several credit unions and the representative bodies played a very important role in that regard. There were cases where standards lapsed and Government arrangements were not what they ought to be. Where serious lapses had taken place, they had not been dealt with. It is fair to say that the assumption that a significant number of bad loans had not been properly provided for within the movement did not prove to be the case. It should be acknowledged that the underlying health of the movement was far better than it had been assumed to be. As the Minister of State has indicated, a final review of the operation was carried out in June 2017. Following an indepth examination by departmental officials, this review concluded that ReBo had completed the performance of its function with positive results. That brings us to where we are tonight in finalising this process.

It would be wrong of us not to understand the major role the credit union movement has played in every rural town and village in the country. Many of us probably opened our first savings account with the credit union. As has been mentioned, the movement helps people to stay away from money laundering and lenders who should not be touched.

They provide access to funding that many people would not be able to access due to their finances, especially at times like Christmas. I served on the housing committee in the previous Dáil. Equally, I am aware of the major role credit unions could possibly play in the delivery of social and affordable housing with the level of funding available on their books. We look forward to perhaps a public private partnership agreement to allow the State and credit unions to use the money to facilitate their members as well.

We welcome this very technical Bill and we will be supporting it. Equally, I put on the record my full support for the credit union movement and the role it has played in society. I hope it will have many success stories in the years to come.

I welcome the Minister of State. This is an important piece of legislation. The restructuring board was set up to undertake a very important and arduous piece of work in terms of consolidating and restructuring the credit union sector in this country. It is a very important sector in terms of allowing access to borrowing for so many within communities who would otherwise not have that access. The work of the board was to oversee the restructuring, which it did. There are 40% fewer credit unions now compared with 2011. It was a large body of work. An Seanadóir Kyne raised a very important issue with regard to the incomplete projects and if the dissolution or unwinding of the board from 2017 is hasty. The projects have been handed over to the Central Bank of Ireland, which acts as the regulator but it also has a consumer protection mandate. I think in particular of a number of credit unions I know that are subject to lending restrictions. Drumcondra Credit Union was liquidated earlier this year. In spite of its protection role, the Central Bank of Ireland did not undertake any exercise to understand how members were, in effect, left in the lurch. The credit union was the sole financial service provider for some who also had savings and insurance cover with it. There are questions and concerns about the work of the Central Bank in terms of completing the restructuring work within the credit union sector.

While we are discussing the dissolution of the restructuring board we should use the opportunity to discuss and reflect on the future direction of the credit union movement. A number of reviews were commissioned and completed in recent years by the Government. The question is what is the Government’s plan now with regard to any future reports on the structure of the credit union sector and the implementation of recommendations. I understand the Department of Finance is currently undertaking a review of the credit union policy framework. That is on foot of a previous recommendation from the credit union advisory committee. We need clarity on where the Department stands with regard to the recommendations for the credit union sector.

We have 280 credit unions in this country. It is a smaller number of credit unions but the individual credit unions are bigger. There are real questions about how credit unions can function as an alternative to conventional banks. We are witnessing a transformation in financial services and how people access them but a significant cohort of people do not have access to conventional banks. The question is how we support credit unions to strengthen their role in day-to-day banking and in lending and borrowing.

The second key question concerns enabling credit unions to lend to affordable housing bodies and for social housing. Some of that demand has been met. In 2018 credit unions were allowed to invest in tier 3 approved social housing bodies up to a value of €700 million, through a regulated investment vehicle. That is very welcome, but I have seen repeated statements from the Minister for Finance that the Central Bank and the Department have completed their role with regard to enabling credit unions to lend to the housing sector, in particular to social housing. My understanding from the credit union movement is that there is a strong desire to be able to lend more. I want to hear from the Minister of State about his plans in that regard, if there are any.

The Minister of State, Deputy Fleming, is very welcome. It is nice to be able to support a Bill that he brings to the House. We will support this legislation. The Bill will wind down the Credit Union Restructuring Board, ReBo. When the board was established many feared that the credit unions would be the next to collapse on foot of the banking crisis at the time. While many difficult years followed for the credit union movement, it got through this difficult period less damaged than many people expected. It came out the other end by utilising its own resources and harnessing the voluntary commitment and social ethos of its members. While the Government of the day put the banks first, the credit union movement had to rely on its own members. Credit unions showed their resilience with only €11.6 million of the ReBo fund being utilised. The restructuring board enabled nearly 100 restructuring projects in more than 150 credit unions, all on a voluntary basis. This is testament to the efforts of the credit union movement, which secured its sustainability into the future. This is only a good thing for the many communities that rely on and depend on their credit unions.

While ReBo is no longer required and has now been dissolved, it is essential that the future sustainability of the credit union movement is supported by the Central Bank. For a long time, Sinn Féin has called for reform of the lending limit rules that apply to credit unions. Recent changes made by the Central Bank are welcome. We would encourage further changes that would allow credit unions to become bigger players in many sectors, including in particular the housing market. Given the current housing crisis and difficulties felt by so many mortgage holders with their banks, the credit union movement is in a unique place to offer sustainable solutions for mortgage holders and those looking for a home. Perhaps the Minister of State might comment on that in his response.

Sinn Féin also understands the challenges the credit union movement will face in competing with retail banks as they seek to attract young members. It is crucial that credit unions are supported as the financial landscape continues to change. Credit unions have served our communities well for decades. They are not like other financial institutions. Indeed, they are effectively financial co-operatives. Sinn Féin is particularly passionate about the need for co-operatives in the broader sense to play a much bigger role in our economic revival. Their social ethos and voluntary ethic provide services to communities and families that can be trusted. As this Bill winds down the restructuring board, I commend the credit union movement on its perseverance.

Cuirim fáilte roimh an Aire Stáit agus guím gach rath ar a chuid oibre. Some 3 million Irish people are members of credit unions at present, following in a long tradition of co-operative action within local communities. The movement started more than 60 years ago to try to free communities from the grip of moneylenders and loan sharks. Sadly, those practices and those practitioners are still with us and credit unions still act as a bulwark against them, so they deserve every possible support and encouragement from the State.

I want to say a few words about how we might give that support but first I wish to ask a question about the rationale for the Bill. I apologise if the question is due to a lack of understanding on my part. Section 43 of the Credit Union and Co-operation with Overseas Regulators Act 2012, which established the Credit Union Restructuring Board, provides that the Minister may, by order, dissolve the board and include in the order such incidental, ancillary or consequential provisions as the Minister considers necessary or expedient. It goes on to say that a draft of his order must be approved by resolution of both Houses of the Oireachtas before having effect. It may well be that I am missing something and perhaps the Minister of State's official can assist us.

It seems to me that the provisions of sections 6 to 13 of the Bill before us today, dealing with the dissolution of the board and the transfer of its functions, property, records and so on, could all have been with by such an order under the 2012 Act without need for further legislation, or am I wrong? I might well be but I would be grateful for an answer to that on the record of the House. Following that line of thinking, I would have thought that resolutions of both Houses would have given the Minister of State the necessary comfort that any order he made to dissolve the board would be within the existing law and the Constitution. I ask this, because while our job is to legislate, as a rule, we aim to avoid new legislation if it is not strictly necessary. As I have said, perhaps it is but at the moment I do not see how the Bill before us today is necessary or adds anything to existing law. However, I would be grateful for a correction, clarification or both on that.

From 2010 to 2013 there was an air of crisis being spread about the credit union movement which was perhaps unwarranted looking back. While there were a number of high-profile cases of credit union failures, including those in Newbridge and Rush, the sector stabilised significantly from 2013 onwards. The problems with the sector in fact paled in comparison with those of the banks and of the €250 million given to the restructuring board to assist credit unions, only €30 million was eventually needed. Maybe it is hindsight but I do recall raising the situation in Newbridge in the House at that time and I believe I spoke about the possibility of the hyping-up of the so-called crisis in the sector and that it might risk long-term reputational damage.

As regards the work of the Central Bank and the restructuring board, we need to reflect on whether the restructuring went too far in some respects. The overall number of credit unions fell from 406 to 246 in the last decade due to Central Bank pressure, with one quarter of mergers leading to office closures in local communities. A number of mega credit unions were formed, for example, in north Dublin, where credit unions in Skerries, Portmarnock, Balbriggan, Baldoyle, Howth, Glasnevin, East Wall and Clontarf, were all merged into one. Another merged entity took in credit unions in Coolock, Artane, Ayrfield and Swords. These are giant entities covering enormous populations and they were given comically sterile and anodyne names such as "Progressive Credit Union", or "Members First Credit Union", which are not exactly imaginative. I mention this because the appeal of credit unions is that people feel that they are part of something in their community and that they have a stake in it, and that is important. In encouraging these mass mergers, in most cases among credit unions where there were no serious financial problems, perhaps we robbed them of the possibility of being seen as local.

Credit unions are going to become increasingly important again as banks continue to antagonise small customers. Just yesterday, AIB and Bank of Ireland, which are both effectively State-owned, hiked their fees substantially for current accounts. As we know, small businesses also face charges for lodgments and other transactions. Meanwhile, many credit unions, including one of the mega entities I mentioned earlier, are capping savings and cancelling dividends because they literally have too much on deposit. Credit unions should be encouraged to lend more to small businesses, but also to individuals. One of the impacts of heightened regulation of the sector by the Central Bank in the past decade is that lending has actually decreased. As of last year, credit union loans comprise just 27% of their total assets, compared with around 65% for AIB and Bank of Ireland. If one does the maths, there is about €7 billion in credit union funds, which they could safely lend. Lending rules now allow credit unions to grant mortgages, but even the largest of them can only do so up to a limit of 15% of their total assets. In conclusion, surely we should be doing more to allow credit unions to lend this money cheaply to people. There are huge barriers which they face in terms of approval for any new products that they have, and they are barriers which the Minister of State can, and hopefully will, work to remove.

Ar dtús báire, cuirim fáilte roimh an Aire Stáit. This is important legislation and I am pleased to speak on it as a former member of the board of supervisors of a credit union in Bishopstown. The credit union movement has gone through gargantuan change in the past decade, some of which I would question in terms of its progress or lack thereof. I listened to Senator Mullen speaking and I concur completely with some of his remarks. The fundamental aspect for many of us and for those in communities is that the credit union movement is still regarded as the people's bank, particularly in respect of their shares and personal savings.

The report of the Commission on Credit Unions has been published and this summer, the Irish League of Credit Unions called for more reform. I hope that as part of future debate, we will have a real debate on the future of our credit union movement. It has looked after an gnáthdhuine, the ordinary person, in our communities so well since its foundation. Senator Kyne is right to commemorate and remember the late John Hume, who died this summer.

The Irish League of Credit Unions reports that it is worried about the upsurge in savings, which is a good thing on one level, then leads to people not taking up lending, which is a source of revenue for the credit unions. We all received the Irish League of Credit Union's 2020 Vision document before the election, and on reading it one can see that some of the policy priorities are quite sensible and should be debated in this House, because while we welcome the Bill today, we need to listen to the Irish League of Credit Unions. Senator Gavan or Senator Mullen raised the issue of the Central Bank and other regulators. I do not question the motivation of these institutions but they do not necessarily have a monopoly on wisdom. The credit union movement is one to which we must listen.

I welcome the reduction in the two levies paid by credit unions, namely, the credit union institution resolution levy and the credit union stabilisation levy, in the Finance Bill 2020, which we will be debating later. It is very important that that has been done. I think we all agree credit unions exist to serve their members within the community. That leads me to my final point, which I have made already and concerns the lack of demand for loans, which is a challenge that the credit union movement is now facing. I hope that can be addressed and we can look at that issue. The other point relates to the capital reserve structure requirement of the credit unions, and I ask the Minister of State to address that in his remarks.

I welcome the Bill. From the Minister of State's time as a spokesperson on public expenditure and reform and while on the Committee of Public Accounts and the finance committee, I know he is very pro-credit union and I look forward to him working with us all who are pro-credit union to bring further change. However, I make the point that we should all listen to and co-ordinate with the credit union movement.

I welcome the opportunity to speak on the Bill and I welcome the Minster of State to the House and wish him well.

There are three main parts to this Bill, whose purpose is to dissolve the Credit Union Restructuring Board, to transfer certain functions of the Credit Union Restructuring Board to the Minister for Finance, and to amend the Credit Union and Co-operation with Overseas Regulators Act 2012. Those are the main parts of the Bill. The restructuring board was brought in when this country was in a much poorer state than it is at present. As we know, some credit unions ran into serious trouble but there were others that had very profitable businesses. The restructuring board was brought in to restructure the whole credit union system, so I think it is to be congratulated in the work it has done. As Senator Mullen has said, in doing that work, the number of credit unions has been reduced throughout the country from 406 to 246 and that in itself limits contact that many people in some areas can have with the credit union. It limits the scope for them to go in on a weekly basis to pay their bills etc., which is one of the downsides of the work that has been done. As Senator Mullen also said, there are 3 million members of credit unions and they have provided fantastic business and opportunities to ordinary rank and file people. In many cases these were people who could not get a loan anywhere else.

Credit unions have helped people by giving them reconstructed grants for their loans for their houses, car loans and small loans to buy a washing machine, tumble dryer or whatever. Credit unions have provided loans that the banks did not want to know anything about so we owe a great debt of gratitude to the credit union movement. From what I see every day, the movement is growing and I know why. It is nearly impossible to open a bank account due to the level of paperwork that is required and the Minister of State should consider this matter. Why can a person go online and open a bank account in a couple of hours but cannot do it in person? I met a businessman who opened an account in a matter of hours with the German bank N26 so now he has his debit card and everything yet there are business people in this country who are at their wits' end trying to open accounts in banks. That is why I say that credit unions were nearly a bank of last resort for an awful lot of people who are in a lot of difficulty. The credit union bailed them out because it knew who they were and many of them had a history of paying back their loans, given time. The credit union movement has done a great service to this country. I welcome and wish the Minister of State well with the legislation. Today is a day for us to give due recognition to the people who volunteer to work in credit unions. Senator Buttimer was a member of a board. Credit unions have done an enormous amount of work and are owed a great debt of gratitude by the people of this country.

I welcome the Minister of State here to speak on the Credit Union Restructuring Board (Dissolution) Bill. I very much acknowledge that ReBo has fulfilled its role, as he has said, under the 2012 legislation. He mentioned that there were 82 projects with assets of €6 billion that covered 156 restructuring of credit unions across 24 counties and performed very well over the period since 2011. I pay tribute to that massive project and acknowledge that the credit unions have also stepped up in the past number of years. Smaller credit unions have been subsumed and the legislation has allowed the amalgamation of a lot of them.

As many Members have spoken about here, there is so much to be said for the credit unions in our areas. Every town and village very much knows the power and importance of its credit union. One sees on Saturdays, when one goes home to try and get money out of one's own bank account, that there are long queues at the credit union. The credit union movement has lasted. For example, there has been a credit union in Ballinasloe for over 50 years. One of its founding members, Mr. Liam Kenny, who was a phenomenal person who worked in the credit union and started the credit union in Ballinasloe, was there to support families in times of huge need in the 1970s, 1980s and 1990s. He said, "that the honesty and integrity of our members has kept us out of all that sort of bother", when talking about governance issues. He also said, "we are a members orientated organisation - our ethos is to help each other" and act in the common good. That is the sense of what credit unions are. They have supported many community projects and work so hard for communities, especially now in this time of Covid. Locally, I have seen investment in my community and they have supported Christmas lights projects, which has happened across the country.

As colleagues have mentioned previously, there are large amounts of cash reserves in credit unions and large levels of household savings that we are fully aware of, over the past year, particularly with the challenges of Covid and the lockdown. Are there plans afoot for credit unions to review their lending regime to allow higher spend amounts and more scope to support people, particularly in this time of Covid? Are we going to support businesses and people coming out of this period and into the new year?

The track record of credit unions has been excellent. There are really good governance measures that have been put in place. We are seeing the benefit of the credit unions that have been effective in their own communities.

I, too, welcome the Minister of State to the House. This legislation is a culmination of a lot of work that was done to restructure, tidy up and ensure there was proper and appropriate governance of moneys within the credit union movement. Today, it is appropriate to salute and acknowledge, as other colleagues have done, the founding pioneering people who developed the credit union model in this country.

I have an extremely close relationship with the credit union movement because I was born and grew up upstairs over a shop that was literally next door to the credit union in Ennistymon. As a small boy I saw the queues for myself, and I saw the people who got opportunities in life, whether it was improving their home, being able to purchase a car, being able to put a television in their home, or even educating their children. That was because the credit union knew the community intimately. The people in it knew the integrity of the community intimately and they knew that, by and large, they would get their money back from the people they lent to. It was driven by volunteers who were caring, compassionate and dedicated to their community and the betterment of the people within their community.

Unfortunately, we do not have a tradition of community banking in this country. In Germany, community banking is probably the strongest financial institution that exists there and it serves the people of that country extremely well. Other countries may not have the best model of community banking, which in my view exists in Germany, but they have variations of it that serve them well. As far as I am concerned, our community bank is the credit union. It is incumbent on us, as legislators, to equip credit unions with the best possible processes and procedures to ensure they can continue to do the vital work they do of providing loans of small amounts to people who need them to improve their lives and ensure their families get the opportunities that we all want in life.

I do not believe that the role of credit unions is to bankroll property development, significant infrastructural buildings or even lend to major community projects such as swimming pools, sports facilities or anything like that. I believe that the future of credit unions should be what was its past, which has been to give a break to the people who need it. I have no doubt that we will continue to evolve in helping the credit unions to do this type of work. I do not mean we should hold the credit unions back in terms of modernising with ICT, ATMs and the suite of supports that will be found in a mainstream bank. Of course we should facilitate credit unions to provide those types of services.

In many ways, I would much prefer to see a relationship developing between the credit unions and An Post. I know that An Post has engaged over recent years with AIB. I would much prefer if that relationship were developed with the credit union movement. Far more synergies exist between the post office and the credit union. In many communities throughout the country, the postmaster is involved in the credit union and, in many cases, is one of the directors. Therefore, An Post has a role play. Maybe at some stage in the future we can develop a real community banking structure, driven by the credit union movement in collaboration with An Post, because in my view that is the future of the movement and the future of the banking wing of An Post.

As always, the Aire Stáit is very welcome to the House.

I thank Senators for their contributions and support of this legislation, which will formally dissolve the Credit Union Restructuring Board, ReBo. The Government recognises the importance of the role of the credit union sector as a volunteer and co-operative movement and the distinction between it and other types of financial institutions has been stated well by several Members.

There were 156 credit unions restructured in 82 projects, involving assets of €6 billion across 24 counties. The final review of ReBo concluded that the board had completed the performance of its functions with positive results and the Minister for Finance has decided to proceed with the orderly winding down of ReBo. This legislation passed all Stages of the Dáil last year in a very straightforward manner, without amendment, and it would have come to the Seanad at the beginning of this year except for elections and everything else that has happened. That is why it is only coming here now.

Several comments were made to which I can respond. A final report will be produced when ReBo is wound down and I am told there is approximately €400,000 in the account to be handed back to the Minister for Finance when this is completed. I was asked whether a post-restructuring report was produced by ReBo when restructuring or amalgamations, which they were in most cases, happened. This would come under the Central Bank's remit and there would have been further onward monitoring afterwards. There would be no issue in that regard.

There was a question of whether we have acted too hastily, given how many amalgamations happened. The rate seemed to slow but there was significant urgency several years ago because of the financial crisis. It is about keeping the process time-limited and not letting it run forever. A number of credit unions are now, of their own volition, choosing to amalgamate with others and they do not need financial support from the State or taxpayer to do this. They are well able to do it with their own resources.

There was a question of whether credit unions are operating well for members. They are and we hope they are keeping many moneylenders at bay. Money laundering was mentioned and credit unions have helped prevent such problems in their activities in local communities.

People have mentioned lending restrictions and although there are certain caps, there is plenty of headroom. I have met people from umpteen credit unions in my short period in the job to date and although they might complain about only being able to issue 100 mortgages from a credit union, in reality they have offered none. They might say they have not issued any mortgages because they can only issue 100 mortgages. I tell them that we might see if they can go further once 30, 40 or 50 mortgages have been issued. This demonstrates a bit of reluctance in credit unions to take that brave step of getting into mortgages.

Everybody has mentioned approved housing bodies and the need for funding but the future of credit unions is in the mortgage market and enabling people to buy their homes. If a credit union provides a mortgage, people will be happy with the loan and the credit union could have that family for life. It is the future of the sector.

The question was asked as to whether credit unions could lend more. There is much money to lend and I encourage them to lend more. There is a limit, and everybody has a limit, but none of the credit unions is near that limit yet. The problem is there is too much money on deposit, and this might cause them to lose money. The best thing we can do for credit unions is help them grow their loan books. That is where they will make interest and profit, continuing the process for the next generation. I would really like to see them carrying out more work in the mortgage market. Some have already started that work but I encourage more to do it.

The legislation allows for dissolution by ministerial order but there are aspects of the Act in question that must be continued, and these are being taken over by the Minister. There is no provision in the Act for those powers to continue if there is dissolution by ministerial order, so the Attorney General has requested that this process be done formally in legislation. It is to enable those powers relating to some outstanding levies to be transferred to the Minister.

There was mention of a lack of demand for loans and I encourage the credit unions to do more in the area. There is also the question of reserves and there is no need to allow for review of more lending, as there is already scope for more lending. I only wish they would loan more money.

Great tribute was paid by a number of Members who saluted the founders of the credit union movement many years ago. Many people in many households would not have got school supplies, the dishwasher or washing machine without their help but credit unions must think a little bigger than household appliances now. There was a time when credit unions were great for giving out car loans but most of the garages now have their own finance arrangements in place so that market has been taken over.

I encourage credit unions to get back into student loans, for example. If a student will be in college for three or four years, the business could be done in the first year and it could be rolled forward each year when a loan is in order. There would be less paperwork in years two, three and four. I also mention the mortgages as well.

There is synergy between the credit unions and An Post. An Post seems to be doing its own work and I agree they are kindred spirits, to an extent, and they are both involved with local communities. It is a matter for An Post to consider and it would not be appropriate for the Minister to make a direction in that regard. The point is well made.

It would match a demand.

I am nudging them into mortgage lending. It is the main message I have for credit unions. They should start giving mortgages to people, as those people would be happier taking a mortgage from a credit union than a bank which could sell the loan to an international vulture fund. I have never heard of a credit union doing that.

I thank Senators for their input and I look forward to progressing the legislation through the remaining Stages in the Seanad.

Question put and agreed to.

When is it proposed to take Committee Stage?

Committee Stage ordered for Monday, 30 November 2020.