Mr. Kevin Johnson:

CUDA is grateful to the committee for inviting us to this meeting. CUDA was formed in 2003. It is owned by 12 credit unions and currently has 43 of the most professional and progressive credit unions among its members, which in turn mange one third of the total credit union assets of €16 billion. Over the past ten years the financial landscape of Ireland has changed dramatically with the collapse, bailout or closure of every single banking institution in Ireland. It is important to note that of the 420 credit unions that existed in 2007, only two were liquidated and three were subject to directed transfers. Although any one credit union closed is one too many, the committee will take comfort in the fact this represents some 1% of those which were in operation, with 99% coming through the crisis intact.

In recent years we have become more consolidated, stronger and smarter credit unions. However, without Oireachtas support to get rules changed to allow credit unions broaden their business, they will not survive. It will surprise committee members to learn that although this is a success story, the regulation that has come into force over the last decade on savings, loans and payments systems has resulted in credit unions being permitted to do less business now than they could ten years ago. This is neither proportionate nor fair, and it can only lead to marginalisation of credit unions as an effective force in lending if this is allowed to continue. We need the help of the Oireachtas to put this right.

The first slide outlines a clear vision that shows credit unions as capable of being the financial hub of their community, offering real choice to people and being a meaningful alternative to banks. We are doing this by building on the qualities that have made credit unions so successful and earned members' trust and loyalty by being there for them and consistently being on their side, whether they are simply trying to cope with the financial challenges of life or trying to achieve their ambitions for home ownership or financial security. Unless we are allowed to compete, however, members will continue to be deprived of best value.

The next slide sets out the legal objects of a credit union. I draw attention to object (b), which refers to the creation of sources of credit, not just personal unsecured loans, for the mutual benefit of its members. This means that where a credit union can prudently and compliantly provide loans, it will also be able to reward its savers, who are in danger of having their needs overlooked. It is clear credit unions are about the optimisation of surplus to improve the well-being and spirit of the members and their community, rather than maximisation of profit for a small number of privileged people, as we see in other institutions.

The fourth slide sets out some key figures that demonstrate the success, the financial strength and the popularity of credit unions. The growth in savings has driven a significant increase in the level of investments, and with credit unions being forced into bank deposits to meet regulatory liquidity requirements, banks now appear to be taking advantage of that situation and charging for such deposits. This is a very serious threat that needs to be addressed by allowing more lending and wider investment classes for credit unions.

The following slide shows that consumer preference was again evidenced last year, as it was in 2015, through an independent survey of 37,000 customer experiences where people recognised that credit unions provide the best customer experience across all industries in Ireland. Other research has also demonstrated that people would like to see credit unions provide more services. We want to do this to ensure people get what they need when they need it and how they need it, and in a fair and equitable way.

At CUDA we have made real progress in helping credit unions strengthen their governance by complying with the absolute barrage of new legislation and regulation while they also continue to provide services, albeit within the 2016 regulations that impose severe caps on the levels of business that can be done. Our work through the solutions centre includes supporting credit unions to provide home loans to their members in a fully compliant and prudent manner, something that those who are building such capabilities should be allowed to do more of. However, credit unions need the help of the Oireachtas Members. There is a wonderful opportunity for Oireachtas Members to enable credit unions to contribute to solving the housing crisis. They collectively have the power to make a simple amendment to the Credit Union Act 1997 that will enable credit unions to collectively lend to approved housing bodies and local authorities for social and affordable housing projects, as set out in slide No. 7. They can urge the Central Bank authorities to substantially extend lending limits where capabilities and financial strength exist, given short-term lending alone is inadequate for their survival. They can also urge them to enhance the classes of investments; for example, we submitted draft regulations, as set out in slides Nos. 8 and 9, to allow credit unions to invest in funds for housing-related purposes. The third way Members can help us is by keeping credit unions on their agenda. The CUAC review and the findings in its report, as set out in slide No. 10, are simply a reflection of the regulatory failure to implement these issues as recommended by the Commission of Credit Unions in the first place. Members should remember that their involvement clearly drives action.

In conclusion, the effect of the new regulatory rules without proportionality relegates credit unions to compete in less than 10% of the Irish credit market. Yet, we have the capital, competency and community from which we can compete on a fair playing pitch with other lenders. The effect of existing rules is like asking us to win an all-Ireland while marginalising our team to staying inside its square, and at the same time allowing competitors free rein over the remaining 90% of the pitch. The outcome of such actions will be plain for all to see. As we meet these needs, we need to broaden our range of lending options by way of loan periods and rates. To do this we seek to work co-operatively with the Oireachtas and with regulators on behalf of all in this State. This is community building, state building and fairness in action, nothing more. We need the assistance of the Oireachtas to mobilise efforts to do this work immediately and, in doing so, this will allow credit unions to help families finance their homes, improve their lives and breathe life back into their communities.