Heather Humphreys (Cavan-Monaghan, Fine Gael)
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I want to ask a few questions on the issue of credit unions in the role of mortgage arrears resolution. Why has the Central Bank not eased or shown more flexibility in terms of credit union lending? For the credit unions to start lending, as the Minister has said, the Central Bank must ease or lift unreasonable or inflexible lending restrictions. Serious consideration must be given to the role credit unions can play in helping to return prosperity to communities and the mortgage arrears resolution process must take into account that even when people have committed to prioritising and meeting mortgage repayments, there may be a need for a small line of credit to assist with essential expenditure. For example, if somebody's only means of transport to go to work is a car and that breaks down they cannot get to work and they do not get paid, which has an impact on their ability to keep their mortgage repayments up to date. It is important that the Central Bank recognises the need for this service and supports credit unions in providing it. I am aware an emergency loan of €500 is available but that is not much use these days, particularly if an emergency arises.

The restrictions in section 35 of the Credit Union Act limit or prohibit a credit union from granting credit to a member whose repayments were rescheduled due to a change in financial circumstances but whose ability to repay has improved. In other words, the section 35 restrictions are preventing members from benefiting from improvements in their financial circumstances. That should be revisited and revised because some people are being disadvantaged as a result of their membership of credit unions.

On the tiered regulatory approach, the proposals in Consultation Paper CP 76 mark a significant departure for the Central Bank from its role as a regulator. The proposals, if implemented, would give the Central Bank an operational role in the day to day management of credit unions impacting directly on the core areas of lending, savings and investments. The intention behind the tiered regulatory approach was to have the appropriate regulatory burden on credit unions, not to micro-manage them. If this intention is to be realised, the Central Bank would need to take full consideration of the feedback received and revise its proposals before the next phase of consultation.

In terms of engagement with credit unions, I speak to people involved in credit unions on a regular basis and I am being told that the Central Bank is not responding to individual credit unions in a timely manner, which is impacting on the operational management of credit unions. I have been told about instances where individual credit unions have submitted information required to move forward to the annual general meeting, AGM, or sought agreement for necessary expenditure but they are facing inordinate delays in getting a response from the Central Bank. They may not even get a response for a status update on their query. What supports is the Central Bank putting in place to ensure the necessary back-up is available to assist credit union chairpersons and directors? Directors of credit unions are not the same as directors of banks but in certain cases they are being treated like directors of banks. Instances have been brought to my attention regarding the treatment received by credit union directors from the Central Bank, which is appalling. I met one person who was very upset by the treatment received in the Central Bank, and it has impacted on the person's health. That is very unfair in terms of some of the people I know very well. They are decent people who are trying to provide a voluntary service in their community and it is unacceptable that people should be treated like that by officials in the Central Bank. I ask Professor Honohan to comment on that type of behaviour.