Seán Kyne (Galway West, Fine Gael) | Oireachtas source

Credit unions play an extremely significant role in Irish life and have done so for over 50 years. The innovative institutions have opened up financial services to large sections of society previously ignored by banks. Figures from the World Council of Credit Unions clearly demonstrate the considerable significance of credit unions in Ireland by revealing that over 3 million citizens are members of some 500 unions across the country. This is in stark contrast with the data for Britain which show that fewer than 1 million out of a population of 60 million are members of credit unions. Inevitably, the absence of credit unions has increased social exclusion and compounded poverty and disadvantage in other countries.

As we are all too well aware, the financial and banking sector has experienced serious problems in recent years, with negative impacts in all areas of our society. A major cause of these problems has been a failure of regulation. Much work has been undertaken to rectify the regulatory shortcomings in the banking sector, with a corresponding financial investment by taxpayers.

Credit unions have, understandably, been affected by the challenging economic conditions, with some experiencing substantial falls in income and the appearance of deficits. Most will agree that circumstances have changed since the last comprehensive statutory framework was put in place in 1997. Various changes were permitted to enable credit unions offer services which were more traditionally associated with banks such as the introduction of ATM cards and the provision of mortgages for the purchasing of property. Within this context, some credit unions grew substantially in size and gradually became exposed and vulnerable to problems more traditionally associated with banks, including bad debts, arrears in repayments and so forth.

It is in the face of these issues which require urgent attention that the Credit Union Bill has been introduced. There are many positive aspects to the Bill and it must be noted that it incorporates many of the recommendations contained in the report of the Commission on Credit Unions, which recommendations included a public consultation process. The Bill will promote prudent, responsible activities in the core functions of credit unions, safeguard members' savings and promote sound, sustainable lending practices. It will provide for enhanced governance structures and independent regulation which will also protect members and bring greater stability to the sector. However, we need to realise the possible and probable impact of certain provisions of the Bill on many smaller, more community-focused and often but not exclusively rural credit unions.

I have received a number of communications, including from the Irish League of Credit Unions and local credit unions, including the Cashel-Connemara Credit Union and St. Columba's Credit Union. I met representatives of the latter some weeks ago and listened to their concerns. As many of them have been highlighted by other Deputies, I will highlight just a few. The representatives are anxious that the office of treasurer be retained in law for the purposes of ensuring the timely preparation of accounts and their presentation to the committee. Other issues include the application of Central Bank-related legislation, dating back 70 years, and the need for a memorandum of understanding between the credit unions and the Central Bank to allow for proportionate and transparent regulation. A number of other measures are suggested in the communications from a variety of credit unions that I will not highlight now, but I am sure they were forwarded to the Minister who I hope will take them on board.

While the Credit Union Bill contains many sensible provisions which will help to strengthen the sector and safeguard the many credit unions in communities across the nation, we must listen to the concerns of credit union members, staff and representative organisations. We must examine their concerns and act proportionately to ensure the Bill achieves its objectives and that it will not cause us to lose sight of the fact that credit unions are volunteer-run, member-owned organisations which provide access to financial services for all in a not-for-profit community-focused way.

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