Áine Collins (Cork North West, Fine Gael) | Oireachtas source

Recently available statistics show clearly that citizens and communities trust their credit union. They appreciate that credit unions are non-profit making, community-based organisations run by community volunteers. People who borrowed from their local credit union are making Trojan efforts to repay their loans. This demonstrates how people do not regard credit unions in the same way as they regard banks. They have not lost trust in credit unions in the same way as they have lost trust in banks. They realise credit unions are there to serve them and their communities. They know that they provide a very beneficial local service. Very often credit unions provide credit lines for people with whom the banks would not necessarily deal. Generally, the types of loans given are different from those given by the banks. During the boom years a minority of credit unions got caught up in the madness, with a few lending more money than was wise for projects that were not really within the remit of credit union lending policy. However, only a minority of credit unions behaved in this manner. The economic situation in the country was bound to affect, to a certain extent, the ability of its members to repay loans. For that reason, the Minister for Finance has committed to recapitalising the credit unions by €500 million and up to €1 billion, if necessary. In the mad noughties there was a perception that there was no end to the money available, but the credit unions have emerged relatively well. This must be considered in the context that there are 399 registered credit unions and 3 million members throughout the country. We all accept that financial regulation is necessary, but, as has been proved, credit unions are not banks and cannot and should not be treated in the same way. A credit union is a voluntary, member-owned organisation where people save and lend to each other at affordable rates of interest.

The Bill provides that the Central Bank will be the regulatory authority which will set the requirements and standards in various areas, including reserves, liquidity, lending and risk management. The Bill gives the bank the power to make regulations, but these regulations will only be made following consultation with the Minister the Finance, the Credit Union Advisory Committee and the credit union representative bodies. Therefore, the credit union movement will have a say in how the bank drafts and implements the regulations. The Bill is only the beginning of this process. In this context, it is imperative that the bank continue to recognise the uniqueness of credit unions as institutions based in communities and working for individuals living in them. The Central Bank is a key institution of the State. It must take into account the spirit in which the Oireachtas means this legislation to be interpreted, just as the Supreme Court takes account of Oireachtas debates when deciding on constitutional issues. There is a danger that because most of the bank's emphasis will, of necessity, be on regulating profit-making financial institutions, it may overlook the unique place in society and the distinct style of the credit union movement. Any regulation can only be introduced or changed over time after serious consultation and agreement with the representatives of the credit unions.

The Minister and all Members recognise the uniqueness and importance of credit unions, especially in an economy that has lost faith in the banking system. I have read the submissions from the various credit union representatives and some progress has been made in dealing with their concerns. I am confident that as the Bill passes through this and the other House more progress can be made in reconciling both sides of the argument. I am sure the final outcome will be in the best interests of credit unions and their continued valuable service to local communities. I commend the Bill to the House.

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