Dáil Éireann Debate, Thursday - 16 July 2020
5. Deputy Ged Nash asked the Minister for Finance his plans for a new credit unions Act; his views on the recommendations from a recent report (details supplied) by an organisation; if he will amend the Credit Unions Acts 1997-2012 to allow additional financing for credit unions for social housing; and if he will make a statement on the matter. [16291/20]
Amharc ar fhreagra7. Deputy Pádraig O'Sullivan asked the Minister for Finance the timeframe for the review of the policy framework within which credit unions operate. [16285/20]
Amharc ar fhreagra67. Deputy Brendan Smith asked the Minister for Finance if detailed consideration will be given to the issues raised in correspondence (details supplied); and if he will make a statement on the matter. [16384/20]
Amharc ar fhreagraI congratulate the Minister for Finance on his appointment as chairman of the Eurogroup. I wish him well in his endeavours at what is, putting it mildly, an interesting time for our economy and the economy globally.
The ongoing situation regarding the Covid-19 penalty for mortgage holders who have taken a payment break and the treatment of mortgage applicants who are on the TWSS by the so-called pillar banks brings again into stark relief the need to develop a real alternative to the commercial banks. The credit union movement stands ready to fill this gap. The Irish League of Credit Unions, ILCU, has urged the Government to amend legislation so that credit unions can provide, for example, up to €900 million in funding for social housing projects. Is this something to which the Minister will commit to doing?
I thank the Deputy for his good wishes. I propose to take Questions Nos. 5, 7 and 67 together.
The Government recognises the key role that credit unions play in the delivery of financial services to local communities across Ireland, the need for which is now heightened. Credit unions account for approximately one third of the consumer credit market and are well positioned to provide credit to support our recovery.
The economic outlook arising by virtue of Covid-19, including reduced demand for new lending, has increased the challenges the sector is already facing.
As a result it was agreed that the credit union advisory committee would report to me on challenges and opportunities for the sector, including the consequences of Covid-19, and any relevant recommendations. I understand this report is complete and I expect to have it in a few days' time.
Several commitments in the programme for Government relate to credit unions. These will be expanded upon in the coming weeks and months by the new Government, taking into account work already completed such as the credit union advisory committee report noted earlier and a separate report on directors which was finalised in February 2020. I will take into consideration the report submitted to me by the organisation referred to by the Deputies in their questions and the views of other key stakeholders.
The questions also referred to social housing. Since 1 March 2018, credit unions have been permitted to invest in tier 3 approved housing bodies for the provision of social housing through a regulated investment vehicle. This could be up to the value of €700 million. As such, the Government and the Central Bank have now fulfilled their roles and it is up to both the credit union and social housing sectors to develop any specific funding mechanisms. I will, however, continue to engage with the credit union movement on this matter and on mechanisms that may enable a vehicle to be established to invest in AHBs.
More broadly in terms of engagement with the credit unions in recent weeks I have had two separate opportunities to meet all leaders of the credit union movement in Ireland to deal with and understand some of the issues Deputy Nash referred to. It is my intention to speak to them again, maybe as soon as next week, to continue to understand the impact of Covid-19 on their movement and the kind of issues we need to consider as a result.
I am pleased that some progress appears to have been made or is about to be made with the credit union movement. There is considerable potential that could be unleashed especially at this anxious moment in our economic history. Given the social importance of the credit union movement it is important that credit unions would have the opportunity to invest in social and affordable housing initiatives. The idea complies with their social and community ethos. We should remember that a considerable number of those saving with the credit union movement include those on local authority social housing waiting lists and those who will look to organisations like the credit union to support them as they move potentially to purchase a home.
Has the Minister considered, or will he consider, a new credit union Act to allow the credit union movement to engage in providing additional financial products to a broad market? Apart from the benefit of the community and social ethos of the credit union movement, we need more competitiveness in our banking system to provide value for the consumer.
I will comment briefly on the question about a new Act. I am not going to give a commitment now on new legislation until I know what the legislation would be needed for and its role. However, I am open to any changes that I believe can play a positive role in supporting the role of the credit union movement in Ireland.
Deputy Nash touched on two points that I accept. The first is the really important social and community role that members of the credit union movement play throughout the country. The second is the fact that we need to continue to try to find new sources of competition and diversity in how financial services and products are provided to citizens. I am altogether aware of the role the credit unions have played in supporting their members who were subject to income and job difficulties at what was, and continues to be, a difficult time for our country.
I congratulate the Minister on his recent appointment. It is a great personal honour for him and I know that he will do Ireland proud in Europe. I wish him the best of luck in his new venture.
I will follow up with a question. The Minister acknowledges that in the programme for Government there are various technicalities that we need to work out in respect of credit unions. There are also commitments to enable and support the credit union movement to grow and to support credit unions in the expansion of services to encourage community development. The Irish League of Credit Unions believes there is a disconnect under the policy framework between the Minister for Finance, who has official responsibility over credit union policy, and the Central Bank, which is responsible for regulation but which has no developmental role and no understanding of what the Irish League of Credit Unions terms the volunteer-led democratic organisation of the movement. Is that something the Minister can examine? Does the Minister intend to publish any terms of reference? If so, when?
I thank the Deputy for his good wishes. I will absolutely do my best to live up to my responsibility as Eurogroup president and to fulfil the mandate I have been given.
Deputy O'Sullivan put a question to me. I hope in the coming days to receive a report that will consider several of the issues the Deputy has touched upon. The Deputy asked about the relationship between the regulator and the credit union movement. There are always issues in the relationship between any part of our economy that is being regulated and the regulator. Yet, in my engagements with the Central Bank on regulation of the credit union sector I find the bank officials appreciate the difference between this part of the financial services sector in our economy and the larger banks and larger organisations. They recognise that and that recognition is reflected in the decisions I have taken on levies as well. When the report is available there might be an opportunity for me to return to the House with an update on the report and hear the views of Members on the future of the movement.
I have one other point. There is also a commitment in the programme for Government to develop funding options to deliver retrofitting with suitable retail partners such as An Post and the credit unions. I understand the Irish League of Credit Unions has been developing a deep retrofit loan product in recent months. It would be a positive step if this was advanced promptly. Will the Minister clarify where this is at?
Decisions on any individual products, such as the product Deputy O'Sullivan has referred to, are a matter for the regulator and the Central Bank. I am aware of work that the credit union movement is doing on this and on several other exciting ideas. I will find out the status of that product and I will report back to Deputy O'Sullivan on it.
