Mr. Kevin Johnson:

I thank Deputy Michael McGrath for the question. The idea of setting out on the third slide that illustration of what business models could be like was an attempt to reflect the obvious diversity within each credit union. The problem is that when one is pitching one-size-fits-all rules, it is aiming at an average, and we do not have an average credit union. Incidentally, if one goes back to the objective of the commission report, the idea behind tiered regulation was twofold. In the first instance, it was to protect the smaller credit unions, which does not necessarily just mean size - although it tends to be related to the asset size - but means smaller in the sense of its business model, that is, in the services it provides. In looking at that illustration, it would be the more traditional model of basic savings and basic personal unsecured loans. The idea here is that appropriate governance would reflect this in order that the cost of meeting all these regulatory requirements would be proportionate to the level of business the credit union is doing. On the other hand, other credit unions are much bigger in size and scale and could have 30,000 or 40,000 members. Consequently, the joint committee can imagine the diversity of needs in such credit unions, as some may be community-based and some may be industry-based. In the fourth slide, we are trying to show the wide range of needs people have, which can be personal or for small business, things at which credit unions again traditionally have been very good, as well as some of the other opportunities to provide some genuine competition on home loans and to provide some proper financing for social housing. There are many different ways to so do and, as was mentioned last night, several proposals have been submitted to the various Departments. Again, to be allowed to move on and to provide more services, we expect that a little more risk will be taken on and, therefore, we accept that it is proportionate that those risks would be managed. However, one cannot have a situation in which the average one-size-fits-all model takes in all of the requirements. For example, over the past two or three years, credit unions have been obliged to develop compliance officers, to implement risk management frameworks with a specific risk officer and to introduce internal audit functions. That may be totally overplayed in respect of the small, traditional business model, but for those that now have this in place and are building up such expertise and competence, we believe this is the appropriate platform from which to provide more services, because one has put in place the risk management structures and infrastructure. To be blunt, to be able to pay for all of that, one must be able to generate the income to cover it. The great thing is that in so doing, we are providing a lot more services for a lot more people.