Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I welcome Mr. Brennan's presentation and the contributions from the other witnesses. Sinn Féin supports the strengthening of credit union regulation but we need to see strong regulation that suits both members and the credit unions themselves. An understanding of the distinctive character of credit unions and the unique role that its members have played needs to be at the core of our deliberations. This Bill misses that understanding. If we ignored the democratic nature of the credit union movement across the island of Ireland, that directors are elected at AGMs and that small credit unions completely rely on volunteers, we would agree with the provisions of the Bill. We might support term limits if we were dealing with the directors of the big banks which take large sums of money from our pockets because we own them, but these are volunteers. That is what is missing from the Bill.

I ask the witnesses to elaborate on term limits and the impact they would have on credit unions, particularly in respect of their democratic nature. There is an impression that directors could sit in a small credit union for the rest of their lives because it is a nice number but is that the real experience for directors and what do AGMs mean? Section 10 is insulting to people who have offered up their time and efforts and who in many instances have established the credit union movement in their communities. It may have been a couple of families who believed in social solidarity and a not-for-profit movement rather than allow bankers and major financial institutions to reap the benefit of people's hard earned cash. However, it is next to impossible to sustain the level of competence required under the Bill. Sections 12 and 13 set out the competences that a director is required to have. The Bill states that one must have competences across the board, including personal qualities, skills, experience, expertise, competence, capabilities, professionalism and probity, along with meeting certain qualifications, backgrounds and legal requirements. However, God forbid, if a director's son painted the local credit union because he or she would have to resign. If a director's wife worked voluntarily as a teller, he would have to resign. If his mother or father was involved on a voluntary basis he would also have to resign. This does not make sense. I ask the witnesses to elaborate on the real impact that will have on the movement.

The memorandum of understanding was mentioned earlier. What do the witnesses envisage the memorandum containing and how could it ensure a good relationship between credit unions and the regulator in the Central Bank?

I have spoken to representatives of local credit unions and I am sure other Members are also being lobbied by credit unions across the State. Many of them are concerned about the new regulations and the associated costs and levies. The witnesses indicated that they would like the Central Bank to carry out a regulatory impact assessment, which is sensible. What would that look like and why is it important, particularly for smaller rural credit unions?

One the key aspects the Commission on Credit Unions addressed was the future development of the sector. This is missing from the Bill, however. While it is important to develop strong regulation that protects members, credit unions and the public, it is also important that we consider the vision for the credit union movement into the future. The witnesses referred to proposals such as electronic transfers and shared services but where do they think credit unions should go and what should we have in this legislation to allow the movement to flourish and mature in a responsible way?

In regard to the risk assessment, it was suggested that we consider the model used in the North, where there are 104 credit union branches. I agree with that idea. Anybody who investigated the banking collapse in Ireland and the risky lending that went on in Anglo Irish Bank will accept the need to consider risks instead of assets. It does not make sense to allow a risky credit union to lend risky products to consumers when a non-risky credit union with the same asset base is regulated in the same way. Why was the work of the FSA in the North and Britain not investigated? Why has the Bill gone down the road of looking at assets?

My final question is not related to the Bill but I am hearing complaints about the lending restrictions that the regulator has placed on a number of credit unions. I have been contacted by individuals who are frustrated because they cannot get money from credit unions solely because of these restrictions. I understand these restrictions could also jeopardise a number of credit unions in the medium term if they remain in place. I ask the witnesses to elaborate on what they think should be done in this regard.

The credit union movement is testimony to what is good in this country and it is a pity that the remainder of our financial institutions did not behave as responsibly. Even the suggestion of amending the previous Act to allow investments in social solidarity projects is commendable and worthy of our consideration.