Select Committee on Enterprise and Economic Strategy debate -
Wednesday, 9 Apr 1997

SECTION 48.

Miss Quill

I move amendment No. 72:

In page 39, subsection (2), line 41, after "Part" to insert "or which are designated in regulations made by the Minister as being services to which the provisions of sections 48, 49, 50, 51 and 52 do not apply".

This section deals with making provision for new, additional services which credit unions may develop in the future, an area which we should try to encourage and promote. My concern about different sections of the Bill, relates to the amount of power given to the Registrar and the number of times a credit union is required to make representations to the Registrar in respect of a given activity. We are envisaging new activities and the whole matter is too open-ended.

Essentially, credit unions have demonstrated over 40 years that they are capable of making good judgments on behalf of their members at every level. While giving this amount of new power to the Registrar of Friendly Societies may be valid in certain specified cases, it is not necessary in all cases. I fear it will add an unnecessary level of bureaucracy and expense.

I ask the Minister to have confidence in the credit union movement in respect of new directions it wants to take and, rather than include the sections I want deleted, make ministerial regulations specifying clearly services in respect of which the approval of the Registrar can be dispensed with. The Bill is far too open ended. I want the Minister of State to specify clearly a range of activities for which it would not be deemed necessary to apply to the Registrar.

Mr. Rabbitte

The entire Bill is an act of faith and confidence in the credit union movement. Deputy Quill's point is fair but the discussions I have had with the Irish League of Credit Unions point me in the opposite direction. It is more comforted by a legislative framework for new services. The Minister of the day could decide not to implement them which is an easier way of achieving what the Deputy seeks. For example, if credit unions decide to pay the water charges bill of every member throughout the country, some us of might agree with that but others might not. It is important that is provided for in a statutory framework.

Miss Quill

The Minister has failed to take on board the essential point. In respect of a new service I do not see why a credit union should have to apply to the Registrar. I do not envisage it will be necessary arising from the track record of the credit union movement that in all cases in respect of a new service it would be required to apply to him. Will the Minister of State take the thrust of my amendment on board? I am not convinced this bureaucracy and expense is necessary. It is not to anyone's benefit. Some of it could be dispensed with if we put more thought into this section.

Éamon Ó Cuív

Will the Minister of State clarify what are additional services? For example, credit unions automatically provide life insurance on loans and shares. Is this an additional service? Does each credit union have to obtain permission to provide it or can a body such as the league representing all credit unions give permission to provide that service?

Mr. Costello

There is nothing wrong with the section in relation to additional services. We are talking about the primary work of the credit union movement and that must take priority. It is essential, for further services that the Registrar would have a role similar to that which he has for the primary work of the movement. Section 49(4) outlines his responsibility in making his decision on approval of applications. "The registrar shall have regard to the interests of the public and of the members and creditors of the credit union and to the orderly and proper regulation of the business of the credit union and to such other considerations as he thinks proper." A decision will be taken within the context of the work and responsibilities of the credit union operation.

While there will be auditing of all financial activities of the credit union, the Registrar is a monitoring mechanism for the public. As legislators, we must be careful that all investments made by citizens are properly used and that the money expended for the provision of such services is used for the purpose for which it is intended. It is a reasonable proposal.

Section 49(5) seems to leave a great deal of scope for delay in decisions by the Registrar. It has to be made within six months or, if not, within 12 months upon the provision of additional information. Is there scope for tightening that subsection?

Mr. E. O'Keeffe

I support the amendment. There is an over emphasis on the involvement of the Registrar. A credit union will not provide new services unless it is worthwhile and of major benefit to its members. The board of credit unions examine diligently and constructively any new service it wishes to provide, for its value to members and the organisation. Many services are in place. For instance, a number of credit unions have ATMs and provide foreign exchange facilities. I do not understand why the Registrar must be involved here. I agree with Deputy Quill there is an over involvement of bureaucracy and it is the major weakness in the Bill. I am taken aback that the Minister of State who has always tried to cut through red tape and bureaucracy has allowed so much of it in the Bill. I am not critical of the Registrar as he has a job to do but he will be involved too much in the day to day operations and policy making decisions of credit unions.

Mr. Rabbitte

I will examine this but legal advice is clear. A credit union is a legal entity and if one wants legislation to guide the credit union movement into the next century, one must start with a clean sheet of paper and lay down procedures. This section provides for how additional services may be approved. Perhaps, there may be inspired ideas for additional services that ought to be disposed of quickly. I will look at whether there is any way to tighten that up.

Éamon Ó Cuív

Each credit union would have to apply separately for permission to provide a service.

Mr. Rabbitte

Each credit union is a separate legal entity but I imagine the registrar will agree centrally a modus vivendi with the Irish League of Credit Unions on this.

Miss Quill

That is not in the Bill.

Éamon Ó Cuív

If the Registrar makes an agreement with all credit unions that they can provide a range of services, such as life insurance on loans, and a new credit union is set up tomorrow, the new one would have to apply to the Registrar to provide a service already provided by every other credit union. Where a service is provided by credit unions and the Registrar has deemed it to be a suitable one, there should be some way to give blanket permission to all credit unions. On the other hand, there could be services specific to a particular credit union on an island, or in other unique circumstances. There could be situations where there would be credit union by credit union permission. There needs to a mechanism where general permission can be given for basic services common to all credit unions and on the other hand to give credit unions a specific identity. Otherwise the matter will be bogged down by unnecessary paperwork.

Chairman

The Minister has indicated he will look at the matter.

Miss Quill

I will resubmit it on Report Stage.

Amendment, by leave, withdrawn.

Section 48 agreed to.