Dáil Éireann Debate, Tuesday - 21 May 2024
68. Deputy Aindrias Moynihan asked the Minister for Finance his engagement to date with credit unions that currently have a savings cap limit of €30,000 to increase this limit; and if he will make a statement on the matter. [22719/24]
View answerThere is a whole range of people who want to support their local credit union, including clubs and societies and people with savings. A number of them have been raising with me that when they go to draw down a grant to do work on the house, for example, or sports capital funding, they come across this cap on the amount of money they can have in the credit union. Has the Minister of State had any engagement with the credit unions and the Central Bank about any flexibility on the cap on their credit union account?
I thank the Deputy for his question. However, I was a little bit confused and hope we might have a bit of clarification in our debate. There is a cap of €100,000, not €30,000 as is stated in the Deputy's question, on member savings, as outlined in Central Bank Regulation 35 of the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. As the Deputy is aware, the Central Bank makes all of its regulations independent of Government. Individual credit unions may take business decisions to limit the amount of savings they accept from their members to less than €100,000. This is a decision for the respective board of each independent credit union. It would not be appropriate for me to comment further on any such independent decisions made. Let us see what we can tease out in the debate, Deputy.
From January 2023 to date, the Minister, Deputy McGrath, my predecessor, the Minister of State, Deputy Carroll MacNeill and I have collectively engaged with over 104 credit unions. Just yesterday I engaged with all the credit unions in Donegal and Derry at a round table in Letterkenny. Separately, officials from the credit union policy unit have regular engagement with sector stakeholders. I can confirm that a €30,000 savings cap has not been raised as an issue at these meetings. There have been a small number of credit unions that have raised the €100,000 Central Bank regulatory limit. It is a very small number compared to the number we have engaged with.
I want to state that it is a priority for this Government to support the credit union sector as evidenced from the recently commenced Credit Union (Amendment) Act 2023. This Act enables credit unions, and will support their continued development towards providing the Irish consumer with a community based, composite financial services provider. We are keen to increase the number of people engaged in the credit union sector. We want to see more members of credit unions and credit unions lending more and allowing people to do more in their communities, be it home renovations or business loans. Particularly in the Deputy's part of the world, there is a very successful Cultivate scheme on which I engaged with a number of his local credit unions at a recent conference.
The issue has been raised with me by a number of different sources, including older people intending to do works on their own home who would be accessing a county council grant, or sports clubs advancing works on their own grounds. Instead of a bank, they are dealing with a credit union but when they go to draw down the grant there is a cap in force on their credit union account. They cannot receive in or have anything more than that cap. Many will not be familiar with the issue until it comes up. The grant body is telling them it has released funding but at the same time there is no money hitting the account. There are bills to pay. Very often, these funds are coming from State bodies anyway. I am trying to establish whether there would be flexibility on such caps.
As I stated, the maximum individual member savings limit is €100,000, which is a sizeable amount, particularly for most community groups. With the exception of large-scale sports capital grants, there are very few grants that we----
This is about a cap of €30,000.
There is not a cap of €30,000. That is up to the individual credit union. The policy of the Central Bank is €100,000. The reason they have that is to ensure the protection of members' savings and to ensure that credit union funding continues to be sufficiently diversified and is not dependent on a small number of members. The Deputy knows how the credit union works. You need an array of members. It makes no difference whether you are saving €5 a month on behalf of a grandchild, or you are a body that is receiving at a large scale. It does need a spread through the community and through the common bond. If there is an individual credit union that has a cap of €30,000, it is a matter for that credit union and a matter for the board. Perhaps the Deputy or the club can engage directly with the board. As members they are entitled to hear from the board the rationale for that reduced cap. As I said, the maximum cap applied by the Central Bank is €100,000. I do not think there is a need to go beyond that. Even if I did, it is a decision for the bank.
Just to clarify, the maximum of €100,000 is not an issue. It is not what is up for discussion. The issue is with far lower caps being imposed on credit union accounts in the region of €30,000. Some local credit unions in Cork are doing that. It would seem it is a more local or ad hoc arrangement. It is not clear on that. I ask the Minister of State to engage with the Central Bank and the credit unions on establishing how extensive the issue is. Given that a far higher cap is possible, there may be flexibility in it. This emerge, for example, when older people are getting a pension lump sum, when people are getting back money on a social welfare payment or are drawing down a grant from the council to re-roof the house. It is that lower end I am particularly focused on, and whether there is a possibility of flexibility, especially if it is an ad hoc cap.
The Deputy might write to me with the specific nature of the query and representations being made. That might give me an opportunity to look at the matter in more detail and see what role I can play, cognisant of the independence of the Central Bank and also of the boards of individual credit unions. The most recent data we have is that 70% of credit unions have imposed their own member savings cap and the average there is about €49,000. The figure of €30,000 is way below both the actual cap implemented by the Central Bank and the average. However, those data are five years old at this state. The landscape of credit unions was very different then. There has been a lot of consolidation since and a number of amalgamations across the country, including in my own constituency. Perhaps the Deputy would write to me and we might have an individual meeting about it where it is appropriate, and I will see what can be done.
