Vol. 1046 No. 5
I move amendment No. 1:
In page 5, to delete lines 23 and 24 and substitute the following:
“3. Section 2 of the Principal Act is amended, in subsection (1)—
(a) in the definition of “officer”, in paragraph (a), by the insertion of “a member of the appellate body referred to in section 37,” after “a member of the board oversight committee,”,
(b) by the insertion of the following definitions:”.
I would like to say a few words. It will give the Minister of State an opportunity. The business before this was moving very swiftly and caught us a wee bit off guard. We have finished the scrutiny on Committee Stage and we are dealing with the amendments on Report Stage.
I commend the hard work, sustained over many years by the credit union movement, which has allowed the sector to grow. Credit unions are trusted in all our communities. They are embedded in all our communities with a long and proud traditions on this island. They have provided so much to our communities and our economy and they can do much more. While many credit unions provide savings account products and consumer credit, many are developing capabilities to provide current account and mortgage lending products, with others expanding into SME lending. This is all to be welcomed. The financial services landscape has changed and is undergoing rapid change. Credit unions have the opportunity to increase their footprint in this sector and across our economy. In this changing landscape, credit unions can and must be enabled and strengthened in terms of their footprint and impact on the sector. I commend the perseverance of the credit union movement over a long period to secure reforms that would unlock their potential.
This legislation is the first substantive credit union legislation since 2011. It contains benefit for members, the credit union community and for individual credit unions.
For community-based credit unions, it will be easier for SMEs in the common bond to access credit. Credit unions will be able to partner with one another to offer a wider variety of financial products and will be enabled to modernise their processes through automated membership and loan applications, which I will come to as part of amendment No. 1. For the first time, credit unions will be able to offer services and products to members by sourcing those services or products from another credit union to the established corporate credit unions, which is an important reform and milestone. Credit unions must be recognised, a collaboration must be supported, and member services must be improved. This legislation enables these developments in a number of key respects. Sinn Féin will support it as we did on Second Stage and Committee Stage, and again as we pass the Bill in the House. We will support the legislation and its provisions.
The purpose of amendment No. 1 to section 17 is to allow credit unions to put in place digital and online membership application processes, while still maintaining in-person application services. Amendments Nos. 2 and 3 are also about that type of modernisation. As I said, this amendment provides for the automation, both digital and online, of membership applications. However, what is the necessity for this provision? Were credit unions prohibited or discouraged from this modernisation under pre-existing legislation or regulation? We have absolutely no problem in supporting this legislation. I just find it interesting that there is a requirement to change the law to allow for something it would be expected should be allowed anyway. I am just interested in whether credit unions were prohibited or discouraged from this modernisation under pre-existing legislation or regulation.
No. As far as possible, at every turn, it is about enabling. This is a clarification amendment that was sought by the credit unions. It is for the purposes of clarification more than anything else.
Amendments Nos. 2, 3 and 6 are related and may be discussed together.
I move amendment No. 2:
In page 11, to delete line 15.
The amendment is grouped with all the amendments in group one. As raised on Committee Stage, these are amendments to section 67 and related amendments to section 17 of the principal Act that will assist credit unions in modernising their membership review and approval processes. These amendments will allow each credit union board to approve new processes for membership approval and remove the need for manual authorisation by the membership committee. That committee will remain in place to deal with appeals.
I move amendment No. 3:
In page 11, to delete line 34 and substitute the following:
“within that category.”,
and
(k) by the insertion of the following subsection after subsection (8):
“(9) A credit union shall—
(a) in the case of a credit union registered before the commencement of section 9(k) of the Credit Union (Amendment) Act 2023, not later than 6 months after such commencement, and
(b) in the case of a credit union registered after such commencement, not later than 6 months after its registration,
put in place a process, approved by the board of directors, for the approval of applications for membership of the credit union.”.”.
Amendments Nos. 4 and 5 are related and may be discussed together.
I move amendment No. 4:
In page 15, to delete lines 15 to 24 and substitute the following:
“ “(d) in accordance with a loan approval process which has been approved by the board of directors.”,”.
The amendment is grouped with all the amendments in group two. As referred to on Committee Stage, these are amendments to section 36 and a related amendment to section 37 of the principal Act which give credit unions greater choice and flexibility regarding loan approval processes. Section 37 provides an expanded appeals process for any loans not approved under section 36. Credit unions will again be empowered to modernise loan approval processes to meet their members' needs.
Is this amendment grouped with amendments Nos. 9 to 16?
It is amendments Nos. 4 and 5.
Okay. This amendment deals with membership committees. I understand that amendment No. 4 concerns the review of doubtful membership applications. What are the current procedures in that regard? Again, what is the requirement for the amendment?
I welcome amendment No. 5. It concerns an issue I brought to the Minister of State's attention on Committee Stage. There was an issue with the numbering in the legislation which has been corrected through amendment No. 5. I also support that.
Amendment No. 4 relates to a loan approval process that has been approved by the board of directors. In the past, credit unions had to spend too much time reviewing and affirming processes that are straightforward, which had to be approved by a physical board at every turn. That is too onerous for a board of directors, especially where we are trying to encourage more volunteers, streamline the processes, and make it a more professionally enabled organisation to be run by a CEO. Again, this is not about prohibiting the approval process by the board of directors but enabling them, should they wish, not to have to do it in person and to enable a certain amount of flexibility to do it otherwise, including by automation. That is the broader purpose of the two amendments. As the Deputy said, these relate to membership but also loan approval processes.
Quite a number of loans are very straightforward. While we do not want everything decided by computer, a certain amount can be decided by computer in the interests of members getting quick decisions, particularly for very straightforward loans. Obviously, there is an important degree of human supervision at every stage, but this is about providing greater choice and flexibility to each credit union to be able to adapt its processes appropriately. As I said, this is all in an effort to be as enabling as possible to allow individual credit unions make the best decisions for themselves, while removing perhaps some of the clunkier elements that were previously holding them back in respect of time and process.
I am looking at the briefing note on this, which is always helpful with amendments on Report Stage. It references amendment No. 4. Am I correct in saying that the purpose of the amendment is to allow for credit unions to put in place digital and online membership application processes while still maintaining in-person membership application services? It appears that is not the case with amendment No. 4.
Amendment No. 4 is to specifically deal with loan approval processes. We are trying to do something similar with membership approval processes and loan approval processes. Each amendment is slightly different. Amendment No. 4 is in accordance with the loan approval process.
I move amendment No. 5:
In page 15, to delete line 28 and substitute the following:
“20. Section 37 of the Principal Act is amended—
(a) by the substitution of the following subsection for subsection (1):
“(1) If an application for a loan which was considered—
(a) by the credit committee,
(b) by a credit officer, or
(c) in accordance with a loan approval process referred to in section 36(2)(d),
was not approved under section 36, the applicant may appeal to an appellate body which, by a decision of such members of the body present at the meeting at which the appeal is considered as represents at least two-thirds of those present and a majority of the body as a whole, may give approval to the loan, overriding the decision of the credit committee, of the credit officer or that made in accordance with the approval process, as the case may be.”,
and
(b) by the deletion of subsections (2) and (3).”.
I move amendment No. 6:
In page 20, to delete lines 33 to 37, and in page 21, to delete lines 1 to 14 and substitute the following:
“(a) in subsection (1), by the substitution of the following paragraph for paragraph (c):
“(c) a membership committee which shall determine applications for membership of the credit union that have been rejected under a process referred to in section 17(9);”,
and
(b) by the deletion of subsection (3).”.
Amendments Nos. 7 to 16, inclusive, are related and may be discussed together.
I move amendment No. 7:
In page 29, to delete lines 2 to 8 and substitute the following:
“67. The First Schedule to the Principal Act is amended by the substitution of the following paragraph for paragraph 12:”.
The amendment is grouped with all the amendments in group three. The amendment to the First Schedule is a technical amendment deleting paragraph 6A. The amendment to the Sixth Schedule is a technical amendment deleting paragraph 6 and allowing for the renumbering of subsequent paragraphs. I can go through that with the Deputy, but these are technical amendments to renumber where we have deleted paragraph 6 and essentially renumbered. I am afraid we have to go through the amendments one by one, as regards moving and agreeing them, but I can go through them in detail as the Deputy wishes.
I move amendment No. 8:
In page 29, to delete lines 31 to 33.
On amendment No. 8-----
There is no further discussion on that, but I will let-----
Was it grouped?
Okay.
There are quite a lot of amendments. There is no more discussion on any in this group, as they have all been discussed.
With the Leas-Cheann Comhairle's indulgence, I will be very brief. I will take the opportunity to speak. I did not catch that amendment No. 8 was grouped. This will be the last one we will discuss, from my side anyway. The amendment deletes lines 31 to 33 of section 68 of the Bill that relate to the Sixth Schedule of the principal Act which provides for matters to be provided for rules in corporate credit unions.
It deletes the text stating the procedure in accordance with which a person may be designated or de-designated under section 67(4) and the circumstances in which a person may be so designated or de-designated. Can the Minister of State outline the purposes or impact of this amendment? It appears to be similar to provisions in section 6. What is the purpose of this deletion and the impact of this amendment?
This was an amendment to section 67 which was no longer needed because it was dealt with by an amendment to section 17. It is a simply a tidying up and rebalancing. There were a number of matters the Deputy asked me about on Committee Stage, which I will be happy to address on Fifth Stage if he wishes.
We are dealing with amendments Nos. 7 to 16, inclusive. That is going to conclude before we move on to Fifth Stage. All the discussions on Fifth Stage are general. I do not mind if the Minister of State comes in at this point.
I will, if that is okay. I thank the Deputy for his support on the passage of this Bill. I know he acknowledges the importance of it to the sector. The sector is very encouraged by the broad support in the House for the credit union sector and for legislation that will enable it to provide much more support and financial services to the people of Ireland. This is very significantly amending legislation and I know the Deputy and I both hope to see its implementation. We will be supervising that through CUAC and trying to make sure we are achieving what we need to achieve.
The Deputy asked me on Committee Stage about the setting of the maximum interest rate and I committed to coming back to him. I do not know if the briefings in between have answered any of his questions but I am happy to address that if he wishes.
Please.
He asked me about the oversight by the Oireachtas of the Minister in setting the maximum interest rate in the legislation. We had a very good discussion about that on Committee Stage. I would point out that there are a number of safeguards in section 38 that replicate similar provisions for ministers for finance in other areas in relation to the setting of rates or levies generally. Importantly, the Minister would have to consult with CUAC before setting the maximum rate. The Minister must also take account of a number of factors set out in section 38(5) of the Bill, namely, matters relating to the current interest rates charged generally, the market conditions generally, the need to avoid distortions and financial stability generally. There is also precedent for the Minister to set rates and caps directly without recourse to the Oireachtas in the consumer credit or moneylenders Act. There is provision there and a precedent in relation to it. Of course, as the Deputy has suggested, this oversight is extremely important. I wanted to come back to him directly on that point.
He also asked me about the consideration of what maximum interest rate should apply and the upper limits in that regard. I will have a final consultation with CUAC. However, the Deputy will be aware that CUAC already gave an opinion some time ago in 2017 and suggested a maximum rate of 2% per month. The rationale for this increase is to allow credit unions to continue to provide small short-term credit. The Deputy discussed, importantly, trying to avoid moneylenders. It is a principle I would completely agree with. We want credit unions to be able to provide small short-term credit loans, as small as €100 for a term of two months, particularly for members who might be in a time of greater vulnerability in their lives and who might otherwise be dependent on the services of moneylenders. That increase will provide the credit unions with the ability to cover the costs of providing those smaller loans. It is not to make a profit; it is just to provide for the servicing of it.
The Deputy had questions at the time, although I think they have been addressed, about digital membership and the loan approval process. We have dealt with that by way of discussion. He also had a question about the delivery of documents and so on, around consent and the electronic means. To confirm what I said on Committee Stage, if no consent is received, notice will still be sent out by post if a member does not proactively consent to that being done by way of electronic means.
The other point the Deputy made was about the review of the CBI's policies and the regularity with which those would be reviewed. He said we have not have reviews by the Central Bank in a timely way. I may be paraphrasing but I think it is fair to say that that is, in essence, what he was saying.
He raised the effect of that on credit unions. Just this week I met the two deputy governors of the Central Bank. I raised the need to perform timely reviews with them and said I was concerned that the review period was migrating towards five years between the establishment of the regulations and having the review. I have also made this view very clear and plain to the Governor of the Central Bank. It is important that there are timely reviews. It is not acceptable that it takes a very long time to gather data before having a review. It is very important that this is done in a timely way. I expect the Central Bank to be able to do that. It is part of its role.
At the moment, a peer review of the performance of the Central Bank is being carried out by the International Credit Union Regulators' Network, ICURN. I have met with ICURN, as have CUAC and the various representative bodies. I have to recognise that the Central Bank is independent. The reasons for that are tried and tested but notwithstanding its independence, I have raised this very directly with both the Governor and the two deputy governors as recently as this week. I have confidence in the Central Bank to carry out its function and I now have confidence that it will expedite that review. I have received that commitment from the deputy governors that it is important to them that this be done in an appropriate and timely way.
I have also discussed with the Central Bank the timing of the commencement of this legislation and the various matters that would enable it to be commenced, such as the updating of the handbook. I expect two different approaches to be taken. The regulatory pieces, such as in relation to corporate credit unions, CUSOs and so on, will take closer to nine months but on the other pieces I expect that because the Central Bank has been so engaged in this work for some period, they will be done much earlier in 2024.
I move amendment No. 9:
In page 29, line 34, to delete “7. Determination” and substitute the following:
“6. Determination”.
I move amendment No. 10:
In page 29, line 36, to delete “8. Provision” and substitute the following:
“7. Provision”.
I move amendment No. 11:
In page 30, line 1, to delete “9. The” and substitute the following:
“8. The”.
I move amendment No. 12:
In page 30, line 4, to delete “10. Provision” and substitute the following:
“9. Provision”.
I move amendment No. 13:
In page 30, line 5, to delete “11. Provision” and substitute the following:
“10. Provision”.
I move amendment No. 14:
In page 30, line 7, to delete “12. Whether” and substitute the following:
“11. Whether”.
I move amendment No. 15:
In page 30, line 12, to delete “13. Provision” and substitute the following:
“12. Provision”.
I move amendment No. 16:
In page 30, line 14, to delete “14. Provision” and substitute the following:
“13. Provision”.
I obviously agree with the Bill passing. I thank the Minister of State and her officials for all their work on this legislation. I think this is the first piece of legislation the Minister of State has introduced herself. I may be wrong.
It was my predecessor, Deputy Fleming.
Yes. It is the first she has taken through the House. I appreciate that the questions that were put have been addressed. We had good scrutiny on this Bill. There is cross-party support for the credit union movement and I appreciate the fact that the Minister of State has taken the time to look at the issues that were raised by me that, come back and report back. That is particularly true of that engagement on the review of policies with the Central Bank. It is very worthy and notable that the Minister of State has had those conversations and gotten that commitment. I am happy to support this legislation.
I thank the Deputy. It is with great pleasure that I thank my predecessor, the Minister of State, Deputy Fleming, for his work in developing this legislation and introducing it in the Seanad. I thank the officials for their extraordinary work over some time, particularly Catherine, who has been engaged in every single consultation with the credit union sector for some years. I see Kevin Johnson is here to support the passage of the Bill. A credit union from Kildare was here earlier to celebrate the passage of the Bill with Deputy Berry, as was David Malone from the ILCU, because the movement is so excited about this opportunity.
It is excited about making sure the credit union movement is sustainable and being able to provide mortgages at more competitive and sustainable rates than has been the case. This is a commitment towards the realisation of the retail banking review and developing a genuine community-focused, not-for-profit financial institution with a physical presence across Ireland that is totally focused on the needs of its members and provides a good service to them in a community-focused way. It is with pride that I have had the privilege of taking this legislation through the House, working with the Central Bank and particularly the credit union representative organisations, the National Supervisors Forum and the Credit Union Managers Association. I hope the Bill will be implemented swiftly. I could not commend it more to the House.
The Bill, which is considered to be a Dáil Bill in accordance with Article 20.2.1° of the Constitution, will be sent to the Seanad.
