Mr. David Matthews:

I thank the committee for the invitation to address it on behalf of the Irish League of Credit Unions. I am the head of the monitoring department in the league. I am accompanied by my colleague, Mr. John Knox, a business analyst from our research and development department.

The league represents almost 400 credit unions and over 3 million members across the island of Ireland, North and South. We have approximately 300 credit unions in the South and 100 in the North. Our credit unions have assets of almost €15 billion. Credit unions are self-help financial co-operatives owned and run by their members. Our aim is to help members who group together under a common bond, such as their place of employment or their local community, to pool their savings and to get access to credit.

This morning we are concerned with rural communities. In the context of an erosion of key services and functions away from rural communities and towards bigger centres of population, the localised credit union model remains not merely relevant but an essential support for the future. It is an essential support for local communities in an age when we increasingly see the globalisation of financial institutions and the deployment of technology almost as a barrier rather than an enabler between local people and the decision makers who make such extraordinarily important financial judgment calls that affect people's lives. In many communities, especially rural communities, the credit union is not just a local source of credit and other financial services, it is the only physically present, face-to-face interaction available for those accessing those services.

The credit union model is locally based and democratic. The decision makers one needs to know and meet are physically present in one's community and, indeed, are from that community. Credit unions are adapting to changing circumstances. We are challenged by macro economic circumstances which mean that, increasingly, the return available for our members' savings is limited and certainly far less than it would have been heretofore. The policy platform of the league is set out in our six strategic steps. It has been circulated to the committee. The platform is intended both to meet emerging needs and to strengthen the credit union model. Three of the proposals, those dealing with micro lending, SME and agri lending and lending for social housing, are set out more fully in our submission to the joint committee.

Late last year a personal micro credit, PMC, pilot initiative was launched in 30 credit unions across the country, branded as the "It Makes Sense" loan. Its aim was to prove that credit unions could offer a loan product that matched the convenience and ease of moneylenders' offerings while addressing the exorbitant interest rates charged by those offerings, yet was within prudential lending guidelines of the Central Bank. The pilot was an undoubted success and the scheme is now being rolled out to as many credit unions as possible. Already, over 80 credit unions are offering these loans, with more to come on board in the coming months. It is intended to circulate details of the scheme to all Oireachtas Members, along with an up-to-date list of the credit unions that offer it, in coming weeks.

On lending for social housing, the league's proposal is in response to Government policy set out in its social housing strategy to 2020. The report of the Joint Committee on Housing, Planning, Community and Local Government supported the initiative as a priority action. The programme for a partnership Government reflected positively on the initiative. While numerous meetings have taken place, to date no substantive progress has been made and this is a matter of considerable frustration for the league and for credit unions.

Turning to lending to SMEs and agri lending, traditionally credit union lending was for personal purposes such as home improvements, cars, educational needs, family events and so forth. The lending types that our proposal seeks to address include loans for vans, tools, workshops, farm buildings, tractors, machinery and livestock. We understand that these loans are different and more complex due to the cyclical and seasonal factors that affect cashflow. This must be appreciated by all stakeholders, including the Central Bank when it is framing regulation for credit unions. It is essential to consider our proposal within its context of ensuring that all applications for loans are expertly assessed so the lending decisions are prudent and members' savings are fully protected.

The Irish League of Credit Unions is providing leadership in responding to community need and Government policy. We now look to the Oireachtas and the Government to deliver on commitments made to credit unions before the election. In particular, we look to the joint committee for practical help in ensuring delivery on commitments made in the programme for partnership Government. Credit unions are not just based in communities, they are rooted in them. On behalf of hundreds of urban and rural communities, the challenge is not just to protect the status quo. The bigger opportunity is to strengthen and develop a credit union model that delivers much more in the future, something credit unions are more than capable of doing. I thank the members for listening.