Credit Union Bill


Dáil Éireann, 8th November 2012

Thank you for the opportunity to speak on this Bill.

The economic crash of recent years was the perfect storm in financial terms, creating repercussions which were felt at global, national and local level and while many families in urban and rural areas of Ireland may not have felt that they were going to be impacted by the collapse of Lehman Brothers in the US, the chain of events set in train by the collapse of that bank was to have an effect that is now being felt by thousands of hard-pressed families across the state juggling huge household debts, high household bills, unemployment or under employment and reduced access to credit.

Essentially, the banking collapse of recent years caused huge uncertainty in banking circles, which necessitated the conducting of stress tests on banks across Europe, which in turn showed up pretty disastrous results for Irish banks and highlighted the need for greater regulation of lending.  This increased financial regulation has required that financial institutions hold greater reserves and this necessity for increasing reserves has created a situation whereby many families in east Galway who regularly got over particularly difficulty financial periods, such as a child starting college, or the expense of Christmas, with the help of a loan from the Credit Union, now found that the loan was not forthcoming and they found that there were no other options available to them.

The Credit Union Bill before us today arose out of the Final Report of the Commission on Credit Unions, which was agreed over a nine-month period between June 2011 and March 2012 by all Commission members, including the Irish League of Credit Unions. The Bill covers 60 of the recommendations contained in the report of that Commission and I’m glad to note that as part of that process, submissions were sought from members of the public and interested parties.

Despite facing huge budgetary difficulties, the extent to which this Government is committed to supporting Credit Unions was demonstrated by the fact that it has put aside €500 million to deal with problems within the sector. This is a very significant injection into the sector at a time when the nation’s coffers are empty and underlines the fact that this Government understands the crucial role that Credit Unions play in every community across the country.

The success of the Credit Union movement in Ireland to date was built on the fact that local volunteers were willing to give of their time for a worthy local cause. The Bill recognises the voluntary nature of the movement, but provides for greater clarity in terms of the roles of all involved, as well as enhanced training for volunteers and in particular for directors.

There are four main provisions in the Bill; these deal with prudential regulation in terms of reserves, liquidity and risk management; governance and roles and responsibilities of various figures; restructuring via transfers, mergers and amalgamations and stabilisation through the provision of the aforementioned support to credit unions that are undercapitalised.

I am glad to note that the Irish League of Credit Unions has given a broad welcome to the Bill, although they do have outstanding concerns in a number of areas.

In recent weeks, I have met with many Credit Union members in both Tuam and Ballinasloe and discussed the issues raised by this Bill and the possible ramifications it may have and I have also met with Managers of local Credit Unions to hear their views and concerns.  One concern raised on a number of occasions is that although electronic payment accounts were included in the recommendations of the Commission, they haven’t been included in the Bill, and many members feel that this is as a result of the banks trying to stymie the Credit Union movement.

The imposition of term limits on board members is another element of the Bill that worries a great many members as they feel that many smaller Credit Unions will find it particularly difficult to find the necessary volunteers in a small local area to ensure the regular turnover of Board members.

With three million members, the Credit Union movement is embedded in communities all across the country.  The Credit Union often provides the economic lifeblood for families in these communities and that is why it is imperative that this Government continues to support the movement and the ideals it represents.

Credit Unions didn’t make the lending mistakes that the banks made and these voluntary co-operative movements should not suffer for the sins of the banks.  The distinction between the banks and the Credit Union movement should be to the forefront in everyone’s minds as this debate continues and we must ensure that as this Bill is enacted, members and volunteers with Credit Unions do not find themselves in a more difficult position in years to come because of the irresponsible lending of bankers operating in a loosely regulated and solely commercial venture.

Rather than place any obstacles in the way of local Credit Unions, we must continue to support the movement so that families continue to have access to funds to tide them over difficult periods and also continue to support the ideals of the movement, that of local communities helping themselves.