Ms Carmel Motherway:

It may have come across as half joking but it is wholly in earnest. Sometimes the best way to strengthen a credit union is to allow it to shrink rather than grow. If a credit union gets itself into the situation where it has excessive amounts of surplus funds for which it does not have loan demand, then there are a couple of dangers which are immediately obvious. One danger is that it becomes some sort of savings or investment club. At the time of the foundation of credit unions, the credit union movement pioneers expressed grave and justified concerns about the development of two classes of credit union members. Today we have three classes of credit union members.

I will elaborate on that point. There is a very large number of members with very little savings who tend to do very little or no borrowing. The middle group consists of the borrowing cohort with typically, modest levels of savings but doing the bulk, if not all, of the borrowing. The tiny group - I have set 3% as a good bar for understanding the extent of the problem - are at the other side of the graph. The examples I have cited are focused on 3% of members holding 33% and greater of the assets of the credit unions. Those present who are credit union personnel and those who are familiar with credit unions will know well that this is setting the bar quite low, actually. Even if one applies that 3% as a starting point, there are potentially 3 million members, notionally, in the credit union movement - we will not talk about that today, hopefully. If one takes that 3 million membership as an example, it means that approximately 90,000 people between them are responsible for upwards of €3 billion. That is a risk which, in my view, has not been fully understood, identified or addressed but we are aware of it through our work. We undertake this fundamental analysis with every credit union we work with. To put that in context, we have worked with upwards of 60 credit unions over the past ten years in this frame and at this technical level. Therefore, I think we have credibility in raising the flag on this issue. As to how the problem is to be addressed, it must be accepted that if credit unions are to be understood and accepted as voluntary member-owned and member-run organisations, then there are great swathes of things they must be allowed to self-determine. However, if they are to be allowed to do that, then in effect, we are asking them to set their own appetite for risk. By setting their appetite for risk, in turn, this will trigger the degree of regulation and supervision that is required to protect the savings of not only the small group of people but all the members and also the functioning of the credit union for the very large number of group of members who do not own the wealth but are in dire need of the services.

We advise that starting with self-determination, they should be allowed to set the appetite for risk,that they should be regulated and supervised accordingly and a very good weather eye is kept on how things progress. By all means, credit unions should be required to operate within certain intelligent parameters. I would dearly love if we had the opportunity to sit down the people who set these things and suggest some of those parameters, based on our experience but I do not know if that can happen.