Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

I am grateful for the opportunity to speak on the Credit Union Bill. I am more than aware of the significant role each credit union has played and continues to play every day in communities across the country. I have been a lifelong member of a credit union.

The Bill will strengthen the regulatory framework for credit unions and provide the basis for a restructuring of the sector over time, which will protect credit union members. Such protection is of vital importance. Credit unions in this country have provided a safe and secure depository for savings of both low and middle-income families, and are a source of lending. They are for many a financial haven, one of the first places to which we turn in times of financial difficulty or hardship. As we are aware, it was the basis of communities at a time when many families and individuals were not entertained by the banks. The only place to which one could turn was the credit union.

Many credit unions had their humble beginnings in parish halls. They now have more than €15 billion in customer deposits and remain open for business. It is important this message is conveyed. It is important also to convey the message that deposits of individual credit union customers are secure, as the €100,000 deposit guarantee scheme applies also to credit unions. Therefore, individual savings are protected. One of the primary aims of the Bill must be the protection of its members.

A core recommendation of the Commission on Credit Unions was that the credit union sector should be restructured. Part 3 of the Bill deals with restructuring. Section 41 establishes a credit union restructuring board to exercise the functions assigned to it by this Part. As per section 41(3), the "ReBo" will be a body corporate with the power to sue and be sued. The creation of a restructuring board which will facilitate and implement restructuring on a voluntary basis is a welcome move. The idea that strong credit unions will be used to support restructuring is a sensible approach to what could be described as an intricate undertaking. One must also acknowledge the necessity of controls, in the public interest, on the management of credit unions. I hope the statutory governance and statutory stabilisation provisions will reflect good practice in other countries.

Credit unions have also been affected by the economic downturn in this country, although it must be noted that the degree of the problems in the sector cannot in any way be compared to those of other financial institutions. I am a great believer in the saying "If it ain't broke, don't fix it." If I were to be in any way critical of the Bill, which has been broadly accepted by the management teams of credit unions, the Irish League of Credit Unions and other interested parties, it would be in the area of regulation. One must admire the huge voluntary and civic role played by so many people right around the country in making credit unions possible. For that reason, I am delighted that the Minister, Deputy Noonan, has conferred to such an extent with the positive people in the Irish League of Credit Unions in preparing the Bill. He has acknowledged that their input is reflected in specific recommendations in the commission report, which were agreed with credit union stakeholders. However, I am concerned that the Central Bank may be too involved in the regulatory process. One of the recommendations of the Commission on Credit Unions was that the new credit union legislative framework should provide the Central Bank with powers to make regulations that set prudential controls, limits, standards and requirements for credit unions. While recognising this, we must uphold what the credit union represents at the coalface and what we could turn it into. In his statement, the Minister indicated that the regulatory requirements would be calibrated according to the "nature, scale and complexity" of credit unions, allowing for the tiered regulation approach recommended by the Commission on Credit Unions.

I commend the Minister on the provision of €500 million in support of the credit union sector. The importance of credit unions lies in the fact that they are rooted in the community. We would very much like to keep them there. We have all appreciated their hands-on approach when people go down on a Friday to seek a loan or pay a subscription. It is a private and one-to-one approach that I would like to see continued as far as possible. I commend the Bill to the House.

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