Ms Carmel Motherway:

Yes, although I can see how it seems counterintuitive for somebody like me to be concerned about this. As it stands, where a credit union member wishes to withdraw his or her savings, the latter are held, notionally and in most cases actually, against any outstanding loan. The member must apply to the board for permission to withdraw and permission may be granted up to a level of 25% of the contingent liability, that is, the member's own liability or any guarantee for which he or she is responsible. The proposal in the heads of the Bill is to remove that requirement in order that, in effect, a member can withdraw shares that are put into play after the loan is issued. In other words, the shares at the time the loan is issued may be attached to the loan and cannot be withdrawn, although anything that comes in afterwards may be. Our concern in this regard is that a relatively liberal arrangement is being exchanged for something more restrictive. Take, for example, a person who owes €4,000 in principal and has €6,000 in shares. The loan, in other words, is covered and everybody is happy. Under the existing arrangement, if the member needs access to these funds, he or she can request a withdrawal up to 25% of the contingent liability. Under the new proposal, however, the shares attached to the loan at the time of issue cannot be withdrawn. That is a cause of concern to us.

Our second concern is slightly more esoteric. As I said, part of our job is to promote and incentivise savings in order that people can build a store of wealth and thus live more independently. The credit union does so by encouraging a model of saving while borrowing which facilitates members in setting aside even modest amounts in savings at the same time as they are repaying a loan. The proposed prohibition in terms of attaching shares to the existing outstanding loan balance removes the credit union's capacity to mitigate risk and could hinder it in doing its job.