Seanad Éireann díospóireacht -
Tuesday, 5 Dec 2023

Vol. 297 No. 10

Credit Union (Amendment) Bill 2022: [Seanad Bill amended by the Dáil] Report and Final Stages

An Cathaoirleach

I welcome the Minister of State, Deputy Carroll MacNeill, to the House and thank her for attending.

This is a Seanad Bill that has been amended by the Dáil. In accordance with Standing Order 148, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister of State may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. For Senators' convenience, I have arranged for the printing and circulation to them of those amendments.

The Minister of State will deal separately with the subject matter of each related group of amendments. I have also circulated the proposing groups to the House. A Senator may contribute once on each grouping, of which there are seven. I remind Senators that the only matters that may be discussed are the subject matter of each grouping of amendments made by the Dáil.

Question proposed: "That the Bill be received for final consideration."

An Cathaoirleach

I ask the Minister of State to discuss group 1 on governance in respect of membership and lending in credit unions, which is the subject matter of amendments Nos. 1, 14, 18 to 25, inclusive, and 46.

Minister of State at the Department of Finance (Deputy Jennifer Carroll MacNeill)

I am delighted to have the opportunity to bring this Bill back to the Seanad. I will speak broadly on the Bill, as the Seanad wishes, about the Bill’s background as we finish up. The Bill is the culmination of three years of collaborative work by my departmental officials, the credit union sector’s representative bodies, the Central Bank and many devoted credit union staff and volunteers from around the country. I thank all of them.

Amendment No. 1 is grouped with the other amendments of group 1. The group addresses expanding the definition of an “officer” of the credit union to include a member of the appellate body, which is referenced in section 37, and changes to the lending processes to allow for loan participation and loan syndication. Amendments Nos. 23 and 24 are on revised processes for loan approval and subsequent changes required for the appeal process. Amendment No. 25 is a technical amendment to section 38 correcting an error in the Bill as published originally. Amendment No. 48 is consequential on the establishment of corporate credit unions.

An Cathaoirleach

I ask the Minister of State to discuss group 2, which is the subject matter of amendments Nos. 2 to 8, inclusive, 10 to 13, inclusive, and 51.

Deputy Jennifer Carroll MacNeill

Group 2 addresses the following issues: the expansion of the definition of a “common bond” to include the common bond of a corporate credit union; the modernisation of the language in the Credit Union Act regarding the objects and purpose of a credit union; the establishment of a corporate credit union and the establishment of its common bond; and provision for credit unions to provide either a description or a map of its common bond on its website.

An Cathaoirleach

I ask the Minister of State to discuss group 3 on governance in respect of oversight and nomination issues, and reporting arrangements to the Central Bank, the subject matter of amendments Nos. 9, 26, 28 to 34, inclusive, 36 to 38, inclusive, 47, 49 and 50.

Deputy Jennifer Carroll MacNeill

In total, 51 amendments have been made to the Bill since its publication in December 2022. While the majority of those were technical amendments clarifying and refining the language of the Credit Union Act 1997, two key amendments were to section 35, which allows credit unions to take part in loan participation and loan syndication, and to section 51A, which allows credit unions to refer members to other credit unions in all circumstances regardless of whether the referring credit union provides the services the member is seeking.

Group 3 addresses some of these amendments. They are technical amendments to clarify and tighten the language of the Credit Union Act as regards some of the following areas: board structure; make-up and governance of credit unions and corporate credit unions; reporting to the credit committee; and modernisation of the Act’s language.

This came from my initial reading of the Bill. There were references to "he", "his", "him", "she", "her" and some other language relating to the wiseness of savings and things like that which were from a different time.

Other issues addressed here include the election of the board oversight committee, the eligibility of a CEO to be appointed to the board of directors, reporting rule changes to the Central Bank, compliance reporting to the Central Bank, decisions made by the board in respect of additional services, the make-up of the nomination committee and the functioning of the corporate credit union.

An Cathaoirleach

As nobody is offering, we will move on. Group 4, which deals with the approval of applications for credit union membership, comprises amendments Nos. 15 and 35.

Deputy Jennifer Carroll MacNeill

The amendments in this group, namely, amendments Nos. 15 and 17, relate to sections 17 and 67. They will assist credit unions in modernising their membership approval processes.

An Cathaoirleach

Group 5 deals with the nomination of property and provision of small payments, which is the subject matter of amendments Nos. 16 and 17.

Deputy Jennifer Carroll MacNeill

The amendments in this group address the issue of changes to the nominations processes and to the processes for small payments on death. These are important changes to the Bill as originally published. Members will be very familiar with the nomination procedure. The two changes here are an increase in the nomination limit from €23,000 to €27,000 and a tightening of the process around that. We are now requiring that it be in line with the procedure for making a will. It has to be witnessed by two witnesses, neither of whom is a beneficiary. The purpose here is to provide additional protection to the person making the nomination but also to provide additional protection to the credit union itself in terms of the robustness of its processes. We thought it reasonable that it should be aligned with the procedures for making a will, that the process would be no more onerous than that and that it should not present too much difficulty to the operation of credit unions or their staff. We consulted widely with the credit union sector before making this appropriate and important change.

An Cathaoirleach

Before moving on to group 6, I want to welcome the Minister of State's mother, Mary, to the House. You are very welcome. Thank you for being here today. I am glad to see that your daughter is suitably nervous in front of her mum. Thank you for being here. I wish you a very pleasant visit to Leinster House. I am sorry for embarrassing the Minister of State and her mum.

Group 6, deals with protocols for referral to another credit union, which is the subject matter of amendment No. 27.

Deputy Jennifer Carroll MacNeill

This grouping inserts a new section 51A that allows for the referral of a member to another credit union, regardless of whether the referring credit union provides the service the member is seeking. This is absolutely core to the operation of the new Bill. What we are trying to do is increase the financial services provided to people all over this country, irrespective of where they live, be that a very rural or very urban area, and irrespective of whether their local credit union is large or small or whether it wants to provide current accounts and mortgages or not.

We want to preserve the ethos of the credit unions so that they can maintain the decisions they wish to maintain. A credit union is a community service, a community bank, a volunteer-run organisation and we do not want to change that. However, we have to balance that with the need for everybody on this island to be able to access financial services in a completely equal way. I would prefer to see a member whose credit union does not wish to provide current account or mortgage services being referred to another credit union rather than the credit union movement losing that member to a bank, potentially, and leaving that member in a position of only being able to compete within the retail banking framework. This is consistent with the retail banking review, the development of a community bank and the provision of equal access to financial services irrespective of where citizens in this State live. It is incredibly important. The operation of this provision is going to be up to the credit unions themselves but I want to see this provision utilised. I do not want to see individual members prejudiced by a decision of their credit union not to refer members and those members then potentially being lost to a bank.

This is about access to financial services across the country, and I want to see it working. In that context, I have asked the credit union advisory committee to look at the implementation of this provision of the Bill, as much as at any other of its provisions. In particular, I am concerned about mortgage lending and access to mortgages. I want to see a genuinely open community bank, and these changes are absolutely core to that.

Senator Seán Kyne

I welcome the comments the Minister of State made on the need for flexibility. There are geographic constraints surrounding some credit unions.

Is it proposed that they would be extended, done away with or that neighbouring branches would be allowed to provide mortgages, for example, if it is not possible for your local credit union to do so?

Deputy Jennifer Carroll MacNeill

The latter is exactly what is proposed. Rather than forcing smaller credit unions to provide mortgages or current accounts in a way that may not suit them, because they may not step into that risk profile, the member of that credit union can and should be referred to another credit union that offers those services and becomes a member of that credit union specifically for the purpose of accessing that financial service, whether it is a mortgage or another service. They will also remain a member of the original credit union. We are not changing the common bond or the geographic area. We are making provision for a credit union to refer a member to another credit union for the services that the other credit union provides.

An Cathaoirleach

I welcome Councillor Gail Dunne from Wicklow to the House. He is the current president of the Association of Irish Local Government, AILG, and he serves on the Bravery Award Council. I welcome him to Leinster House. I also welcome Jordan Lewis from Roscrea, County Tipperary, who is a guest of our colleague and friend, Deputy Alan Kelly.

Does Senator Casey wish to come in? No.

Deputy Jennifer Carroll MacNeill

Yes, the purpose is about referring members rather than changing the common bond.

An Cathaoirleach

I should have welcomed people from the Irish League of Credit Unions, ILCU, at the beginning but I did not get to. I welcome David Malone, the CEO, and Margaret Heffernan, the vice president. I welcome Kevin Johnson, who is the CEO of the Credit Union Development Association, CUDA. I welcome Colm Lawless, who is no stranger to many of us in Leinster House. He is the director of the ILCU and the chair of Heritage Credit Union. As a former member of the credit union supervisory board, I think we are all part of the credit union movement in this House. Our guests are all very welcome.

We are moving on to group 7, which is organisational and administrative issues, specifically the AGM and communications, and the subject matter of amendments Nos. 39 to 45, inclusive, and amendment No. 88. I ask the Minister of State to contribute.

Deputy Jennifer Carroll MacNeill

This is about empowering the credit union boards to better manage their own governance to allow them to focus and concentrate on strategy and development rather than detailed operational matters. This grouping addresses the following issues: organisational matters regarding the delivery of notices of meetings, documents, annual accounts and the calling of meetings; a quorum for a general meeting of a corporate credit union; the minimum number of members of a corporate credit union; and technical amendments to the first Schedule and the insertion of a sixth Schedule, which are basically matters to be provided for in the rules of a corporate credit union.

Question put and agreed to.

An Cathaoirleach

When is it proposed to take next Stage?

Senator Pat Casey

Now.

An Cathaoirleach

Is that agreed? Agreed.

Question proposed: "That the Bill do now pass."

Minister of State at the Department of Finance (Deputy Jennifer Carroll MacNeill)

I would like to take this opportunity to thank all of the people involved in this collaborative piece of work: my predecessor, the Minister for State, Deputy Sean Fleming, who introduced the Bill into this House; and my officials on the credit union policy team, Catherine and Miriam in particular, who have done extraordinary work on this. I also thank the representative bodies - the ILCU; CUDA; the Credit Union Mangers’ Association, CUMA; the National Supervisors Forum, NSF; and the staff on the Registry of Credit Unions in the Central Bank - for their work on this and for their invaluable help. This has been a hugely collaborative effort.

Over the past year, as the Bill evolved, I met directly with many credit unions, their voluntary board members, management and staff. From January of this year I think we had 57 engagements with different representatives of credit unions o the development of this Bill. It is a hugely important opportunity to be able to solidify the position of the credit unions in the financial services architecture of this State and provide for its sustainability through increased lending. It is developing a community bank as is envisaged by the Retail Banking Review.

An example of the practical benefits of this is the establishment of a sector-wide mortgage CUSO that is currently being developed. I am happy to inform the Seanad that the CUSO has exceeded its funding target and will be up and running in 2024. The intention and purpose of this is to provide for a nationalised, standardised mortgage offering. Credit unions can have an enormously important role in the mortgage market, which is ever important, and one that is competitive against our current banks and offering. Of course, credit unions are already offering mortgages but I would like to see them do a great many more to enhance sustainability and increase access to financial services for people around this State in a very competitive way.

I am pleased to have been able to take this through the House on behalf of all the people who put the collaborative work into it. It will make a huge difference in terms of access to financial services.

Question put and agreed to.