Paul Connaughton (Galway East, Fine Gael) | Oireachtas source

I welcome the opportunity to speak on this Bill. The economic crash of recent years was the perfect storm in financial terms, with repercussions that were felt at global, national and local levels. While many families in urban and rural areas of Ireland might not have felt what they were doing would have been impacted upon by the collapse of Lehman Brothers in the United States, the chain of events set in train by the collapse of that bank has had an effect that is being felt by thousands of hard-pressed families throughout the State who are juggling huge household debts, high household bills, unemployment or under-employment and reduced access to credit.

The banking collapse of recent years has caused huge uncertainty in banking circles which has necessitated conducting stress tests on banks across Europe. This has produced quite disastrous results for Irish banks and has highlighted the need for greater regulation of lending. The increased financial regulation has required that financial institutions hold greater reserves. The necessity to increase reserves has created a situation in east Galway whereby many families who regularly get over particularly difficult financial times, such as a child starting college or the expense of Christmas, with the help of a loan from their credit union now find that the loan is not forthcoming and there are no other options available to them.

This Bill arose from the final report of the Commission on Credit Unions. The report was agreed over a nine month period between June 2011 and March 2012 by all members of the commission, including the Irish League of Credit Unions. The Bill covers 60 of the recommendations in the commission's report. I am pleased to note that as part of this process, submissions were sought from members of the public and interested parties. Despite facing huge budgetary difficulties, the extent to which this Government is committed to supporting credit unions was demonstrated by the fact it put aside €500 million to deal with the problems in that sector. This is a very significant injection of funding into the sector at a time when the nation's coffers are empty. It underlines the fact the Government understands the crucial role credit unions play in every community in the country.

The success of the credit union movement in Ireland to date is based on the fact that local volunteers have been willing to give their time to a worthy local cause. The Bill recognises the voluntary nature of the movement but provides greater clarity about the roles of all involved, as well as enhanced training for volunteers and especially for directors. There are four main provisions in the Bill and these deal with prudential regulation in terms of reserves, liquidity and risk management; governance and the roles and responsibilities of various figures; restructuring via transfers, mergers and amalgamations; and stabilisation through the provision of the aforementioned support to credit unions that are under-capitalised.

I am glad to note the Irish League of Credit Unions has given a broad welcome to the Bill although it has outstanding concerns in the number of areas. In recent weeks, I have had contact with many credit unions in Tuam, Ballinasloe, Athenry and Mountbellew in the Galway East constituency to discuss issues raised by the Bill and its possible ramifications. I met the managers of a number of credit unions to hear their concerns. A concern raised on a number of occasions is that although electronic payments were included in the recommendations of the commission, they have not been provided for in the Bill. Many credit union members believe this is as a result of the banks trying to stymie the credit union movement. The imposition of term limits on board members is another element of the Bill that worries many credit union members. They feel smaller credit unions will find it particularly different difficult to find the necessary number of volunteers in a small local area to ensure the regular turnover of board members.

With hundreds of thousands of members, the credit union movement is embedded in communities throughout the country. The credit union often provides the economic lifeblood for families in communities and it is imperative that the Government continues to support the movement and the ideals it represents. Credit unions did not make the lending mistakes of many banks. The voluntary co-operative movement should not suffer for the sins of the banks. The distinction between banks and the credit union movement should be to the forefront of everyone's mind as the debate continues. As the Bill is enacted, we must ensure credit union members and volunteers do not find themselves in a more difficult position because of the irresponsible lending of bankers operating in a loosely regulated and solely commercial venture. Rather than placing obstacles in the way of local credit unions, we must continue to support the movement so that families continue to have access to funds to tide them over difficult periods. We should also continue to support the ideals of the movement, namely, local communities helping themselves.

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