Tom Fleming (Kerry South, Independent)

I am a member of a very viable credit union. There is great concern among the officer board and members which I am sure reflects many credit unions across the country. They feel they are in a straitjacket because of the regulations imposed by the current regulator. They are prohibited in many cases from lending to very worthy applicants because of the current restrictions.

Many people who wish to borrow money are in the SME sector or need to make household improvements and have very good credit ratings. Families who have been long-time members of the credit union have excellent credit ratings. What is happening will affect people's credit ratings in the future. Credit unions do not object to regulation as long as it is balanced and appropriate.

Apart from the economic difficulties, the actions of the regulator are exacerbating the problems of credit unions and their members. The new lending situation is imposing individual loan limits irrespective of the creditworthiness of members. The regulator specifies the total amount of loans that can be issued in each month and links total loans issued to cash received without reference to assets, reserves or liquidity. The liquid cash available in my credit union totals €30 million but it is restricted.

All commercial business loans have been banned which affects the self-employed, tradesmen and farmers. Specific loan terms in addition to existing limits under the 1997 Act have been imposed. All these restrictions threaten the viability of credit unions by adversely affecting their most important source of income - loan interest. Curtailing their ability to lend curtails their ability to generate income, which is their lifeblood. Members with good repayment records are being forced in County Kerry to turn to money lenders. We cannot allow that situation to continue. In existing loans, there is inflexible interpretation of the rules on the bad and doubtful debts. Credit unions are unable to respond to members' need to reschedule loans and there is an overemphasis on writing off loans when long-term restructuring could resolve issues. Current income and potential future income is being eroded, draining the lifeblood of the credit unions and shrinking loan books. Action is needed and I welcome what the Minister is trying to do. A more flexible approach from the regulator is necessary as it is to allow the credit unions greater discretion to carry out their duties.

I ask the Minister for Finance to take these matters on board and will provide any information I have that might be helpful to him when it comes to amending the regulatory instruments.

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