Thomas Pringle (Donegal South West, Independent) | Oireachtas source

I welcome the opportunity to contribute to the debate on the Credit Union Bill. The credit union movement is one of the largest voluntary organisations in the country. In many areas, credit unions are the only source of loan finance for many people who have difficulty accessing bank services. Many of them probably would not want to access those services in any case. There is great distrust of banks and financial institutions throughout the country, but in most cases credit unions have retained the full support of local communities because they are owned by the members, are run for their benefit and provide services to them. Banks are not there to serve their customers but to make large profits and look after their shareholders. That is the critical difference between the credit unions and the bank system.

It is a mistake to apply in this legislation the full raft of regulations from the Central Bank when there have been 70 years of regulation of the credit union sector. The legislation should recognise that this sector is different and has a different role to play in society. This role could be developed to make it stronger and even more important. What we need to develop is an alternative to the banking system. Credit unions have the potential to play that role as they are owned by and work for their communities. If we protect that ethos in legislation and in Government policy, we can ensure that we develop an alternative to the banking system - a credit union system that works on behalf of its members. In order to do that, credit unions need to be able to access the clearing system of the banks and introduce services such as debit cards and direct debits, allowing people to serve their financial needs through the credit union system.

It is crazy that while banks are closing branches throughout the country, removing services from their customers and forcing elderly people to use the so-called hole in the wall to make deposits and carry out other financial requirements, credit unions are required to lodge their funds in banks. Banks can withdraw their services safe in the knowledge that if people save money in the credit union, that money will be given to them on deposit so they can use it for whatever they want. In the past we saw how they used it to the detriment of everybody. If we allowed credit unions to access the clearing system and provide services for non-members and other legal entities, that would ensure the development of an alternative to the banking system. The banks would certainly fight this tooth and nail because they would not want to see a viable and real alternative that was in the ownership of local communities and individuals rather than under their own corporate ownership.

It would be of major service to the country if the credit union movement could be developed into such an alternative model. A third financial pillar of this nature could provide real services for real people.

I ask the Minister to consider, between now and Committee Stage, allowing credit unions to provide services for people who cannot, for whatever reason, access their own credit union. I refer to individuals who may find themselves some distance from their credit union and may wish to withdraw or lodge money. It seems nonsensical to refuse to allow people to do this.

Credit unions have loan-to-deposit ratios of 40%. In other words, only 40% of the funds held by credit unions are out on loan at any one time. Earlier today those at Bank of Ireland were patting themselves on the back because that institution is on target to reach a loan-to-deposit ratio of 130%. Rather than being used to prop up or recapitalise the banks, the money held by the credit unions could be used for community and Government-supported projects. If, for example, credit unions were allowed to invest in community wind farm projects, this would generate both a revenue stream and a return for them. Credit unions could also be allowed to invest in Government-supported and guaranteed projects. This would be of assistance in dealing with the infrastructural deficit.

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