Charlie McCreevy
Ceist:24 Mr. McCreevy asked the Minister for Finance the role he envisages for credit unions in any proposed reform of the banking industry; and if he will make a statement on the matter. [11613/96]
Ceisteanna—Questions. Oral Answers. - Credit Unions Role.
Over the past few years there have been major developments in the methods of delivering retail financial services. These developments have been based on the use of increasingly sophisticated information technology systems. As the banking market continues to develop, access to the types of services currently offered by the major high street banks will be essential to ordinary day-to-day living for all our people as telephone banking, plastic money, the electronic purse, etc. become the normal means of transacting business.
The credit unions and indeed An Post have a major role to play in providing access to such services for the current non-banked. One of the issues being considered by myself and my colleagues in Cabinet in relation to the restructuring of the State banking sector is how we ensure the widest possible availability of financial services at competitive prices which encompasses the needs of all sectors of our society.
It is in view of the implications for retail banking of these developments that the future role of the credit unions is being considered in the context of the Government's current review of the State banking sector. My colleague, the Minister for Enterprise and Employment, is preparing a new credit union Bill. This Bill proposes to allow credit unions to expand their range of financial and advisory services, subject to the approval of the Registrar of Friendly Societies. The Bill will also consolidate and update the credit union legislation, reflecting the role of the modern credit union movement as a major player in the provision of personal financial services.
This is becoming a long-running saga. In 1994 the Minister said, in reply to a parliamentary question, that he would move slowly as regards a third banking force. Would he not agree that it is over 18 months since the Government came to power, more than two years since the matter was before the last Government and various reports were commissioned, and well over two years since the National Australian Bank proposed a take-over of the TSB? Has the Government decided to abandon the idea of a third banking force?
The Government has made no such decision.
The Minister was quoted as saying that, perhaps, it would be better if the idea were abandoned. Will he agree that, rather than try to square the ideological positions of the three partners in Government with three sets of proposals, it would be better to bring this saga to an end to protect our reputation internationally as a country with which one can do business? This may be the best course to take because it is highly improbable that a good decision will be made. Has the idea been abandoned?
On the contrary. I regret to inform the Deputy that the raison d'être for the fire sale proposals to sell off the ICC and the ACC which emerged during the stewardship of the Fianna Fáil-Progressive Democrats administration no longer applies because of the wonderful performance of the economy. We are not so starved of cash that we have to rush to sell off these valuable State assets which are performing adequately. If the sale had been proceeded with because of the desperation of the Progressive Democrats and Fianna Fáil, it would have resulted in a contraction of competition in banking services.
We are assessing the impact of new technology, including the electronic purse, and trying to ensure that within the timeframe of the next five to 15 years all people who receive moneys will not be divided into two new categories; those who have access to forms of banked plastic and those who do not. This is an extraordinarily complex area worthy of detailed consideration.
To respond to the Deputy's specific question, as he is probably aware, the credit unions have control of assets of approximately £1.6 billion and are growing at a rapid rate. We have to ensure the way they perform and the services they provide are interchangeable and interlinked with the rest of the financial system. One has to consider also the consequences of economic and monetary union. As the Deputy will readily see from the reply I have given, we are a long way from fire sale proposals to sell off the ACC and the ICC which is what the Progressive Democrats and Fianna Fáil wanted to do.