Skip to main content
Normal View

Credit Unions

Dáil Éireann Debate, Thursday - 28 April 2022

Thursday, 28 April 2022

Questions (11, 16, 30, 75)

David Stanton

Question:

11. Deputy David Stanton asked the Minister for Finance the way he plans to support credit unions in the expansion of services to encourage community development; and if he will make a statement on the matter. [21411/22]

View answer

Holly Cairns

Question:

16. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to enable the credit union movement to grow as a key provider of community banking in the country. [21420/22]

View answer

Joe Flaherty

Question:

30. Deputy Joe Flaherty asked the Minister for Finance the initiatives that he is taking to expand the credit union sector; and if he will make a statement on the matter. [20525/22]

View answer

James Lawless

Question:

75. Deputy James Lawless asked the Minister for Finance when the review of the credit union policy framework will be completed; and if he will make a statement on the matter. [20528/22]

View answer

Oral answers (14 contributions)

I acknowledge the great work that the Minister of State, Deputy Fleming, is doing in the area of credit unions, for example by updating and modernising them and creating community banking. What are his further plans to support credit unions in the expansion of services to encourage community development?

I propose to take Questions Nos. 11, 16, 30 and 75 together.

I thank the Deputy for raising the expansion of credit union services. The Government recognises the importance of credit unions. The programme for Government contains four specific commitments for the sector. These can be condensed into one key commitment, which is to enable the credit union movement to grow. That means growing credit unions' lending books. I addressed the Irish League of Credit Unions AGM in Belfast at the weekend which was also addressed by the registrar of credit unions. It was made clear at that meeting that the loan-to-asset ratio in the credit union movement is about 27%. That is not a sustainable level, which is why many of them have difficulties because they are not generating enough income. I have met many representatives of credit unions individually. Some of them have told me that in years gone by, 60% or 70% of their membership would borrow from them at different times of the year but for many credit unions the percentage of members who borrow from them now is well below 20%. Therefore, a key issue for the credit unions is not a shortage of savings but a shortage of loan applications. I really encourage them to lend more. The retrofit scheme is a perfect fit for the credit union movement because people who go into the scheme will need to borrow. Credit unions will be able to give loans over a longer period than they could historically. They will not have to take a charge on a house. The major banks will not want to finance them as much because they will be giving out big unsecured loans and it will not be worth their while to take out security on a house for a loan that might be for a retrofitting project. The scheme is perfect for the credit unions because they know their people and will be happy to give out unsecured loans. That is what I would encourage the credit unions to move into. They have lost business. Over the years, people used go to them for car loans but that is all done through garage finance now. It is a big issue and we are working constructively with them.

I thank the Minister of State for his response and acknowledge the work he has been doing on this. I hope he will manage to finish his work on the area because the targets are very laudable.

The credit unions tell me they see themselves as being punished for taking on members' savings by having to put aside at least 10% of all savings in reserves. They maintain that this can only be funded by making a surplus and putting it into reserves. They say that this is money that should be given back to members through dividends and rebates. They also maintain that no other financial institutions in Ireland, including the banks, have to do this. They have the most restrictive capital requirements of almost any financial institution globally. I acknowledge what the Minister of State said about the unprecedented growth in savings in recent years. That is why most credit unions have to limit the amount of savings that members can save with them. I tend to agree with the Minister of State that this is not good given the declining number of options to bank in our towns and villages. Has the Minister of State any plans to change this?

Since the Government came to office we have had detailed consultation with all the representative bodies in the credit union, several rounds of consultation culminating in a recent meeting I chaired with all the representative bodies. There is agreement across that entire group on 15 changes that will help the credit unions. We are starting to draft the legislation for those. There is much work in that and it is important.

The capital requirement is very important. There is a requirement for 10%. As I said, I was at the AGM of the credit unions. The unions themselves voluntarily have reserves at 16% nationally, so they can reduce the reserves they are talking about from 16% to 10% without any impact from the Central Bank. They are saying the 10% is a problem but very few credit unions are down at the 10%. Most of them are over 12%. If one got below 12% the Central Bank would look but there would not be two out of the whole 200 in that category. All the other credit unions in Ireland have reserves way in excess of what the Central Bank requires them to have and they are doing that themselves. The way to deal with it is to lend more money.

I thank the Minister of State for his response. I am quite interested in what he said about only two credit unions in the country being at that point. I have met one of them and its management are concerned about this. Perhaps I was just unfortunate to have met with the one that is in that position but its management maintains it was limiting its ability to expand, grow and take on more.

I wish to put something else to the Minister of State. In many of our towns and villages An Post is finding it difficult to get people to get on its mandate. Is there any way An Post and the credit unions could amalgamate and get together so where there is no An Post outlet in a town or village the credit union could perhaps perform that function, take on the role and maybe apply to An Post for the franchise?

That is an interesting point. Both those organisations deal with the Department of Finance. An Post has a good arrangement with AIB and Bank of Ireland for dealing with its cash business and everything like that. Especially as Ulster Bank is withdrawing from Ireland and the other banks have announced many branch closures, there is a fantastic opportunity for credit unions. In many towns throughout Ireland the credit union is the only financial institution left standing. Most of those areas may or may not have a post office or vice versa. I am loathe to suggest collaboration as I do not know that the credit unions would appreciate that but there is a logic in what the Deputy is saying. Both organisations have a strong tradition and are respected by the people. An Post and the credit union are probably the two most respected brand names in the country. However, both are separate organisations. It is an interesting point people may wish to speak to me about.

On the other point about the credit unions, if the Deputy wants to contact me through my office I will be happy to follow up any individual case and if needs be meet the credit union involved.

Could I ask one more question? It has to do with the levies.

I have lost track. I think the Deputy has been in twice already.

Have I? I am sorry about that.

He is going to get another chance in a minute because his name is coming up.

Okay, fair enough.

I am moving down through the list. I may miss someone if they are not here. Deputy Stanton is coming up again for Question No. 31.

I apologise a Leas-Cheann Comhairle, but has Deputy Mairéad Farrell been in contact about my taking her question for her?

I am going to take Deputy Stanton's next question. I have no notice of that.

Questions Nos. 13 and 14 replied to with Written Answers.
Question No. 16 replied to with Question No. 11.
Question No. 17 replied to with Written Answers.
Questions Nos. 19 to 21, inclusive, replied to with Written Answers.
Questions Nos. 23 to 29, inclusive, replied to with Written Answers.
Question No. 30 replied to with Question No. 11.
Top
Share