Michael Colreavy (Sligo-North Leitrim, Sinn Fein) | Oireachtas source

I sometimes like to simplify issues. During the late 1980s and early 1990s when I was younger, a number of other people and I used to think about how north Leitrim might be a better place, the problems it faced and the opportunities available. I recall listening to people in the community and although we had three banks in the town in which I lived, many people felt the commercial banks were for the guys with plenty of collateral and that any financial support they required would have to be met by moneylenders. I believe they were legal as well as illegal moneylenders at the time. I recall thinking that a credit union would make a great difference to the area in which I lived if it could be established, but the group I was working with knew that would not be easy because a number of unsuccessful attempts had been made to establish a credit union. They were unsuccessful mainly because of the difficulties in recruiting and retaining voluntary people from a rural, sparsely populated area. That was the main problem. However, we took on the challenge. I recall it was difficult to get a sufficient number of people from a low population to meet the credit union board of management and the regulatory requirements set down, but we got them. We went through six months of intensive study, training and preparation. It was great that voluntary people would do that. I often refer to them as ordinary people doing extraordinary things. I recall the great support we got from the Irish League of Credit Unions and from credit union officers from adjoining chapters.

It took a while but eventually we founded the credit union in 1996. Unfortunately, I do not have the opportunity or the time to play an active role in the management of the credit union although I remain an enthusiastic member and I am privileged to have been one of the founding members but from those humble beginnings in 1996 we now have a credit union in our own premises on Main Street, Manorhamilton with approximately 2,500 members which, if I calculate correctly, is about one in every three men, women and children in the catchment area. We have approximately €7 million in shares and €2.5 million out on loans. We hope, subject to approval, to pay a 1% dividend this year and a 10% interest rebate. Of the loans this year a total of €8,900 was written off. That covered eight loans, just over €1,100 per loan, and there was a surplus of €339,514 at the end of September, which is the end of the accounting year.

The big banks and the investors who are used to talking in billions and trillions of euro would probably chuckle patronisingly at the figures I have mentioned and might call them peanuts, but Manorhamilton and District Credit Union, mainly through the voluntary work of many people, has done more for those 2,500 members than the commercial banks ever did. The bigger institutions perhaps should stop the chuckling long enough to ponder how an institution such as a credit union, with mainly voluntary workers and a voluntary board of management and its ethos of neighbourliness and community solidarity, has managed to continue in successful operation when they crashed their own businesses, their country and their people. Big is not necessarily beautiful, nor is it necessarily safe, efficient or effective.

I disagree slightly with what Deputy O Cuív said earlier. I would want a much wider societal role for institutions such as the credit unions. There is nothing wrong with widening the role provided it is a societal role, not just for the credit unions but for the post office network also. We should be reducing our over-reliance on for-profit financial institutions.

On the Credit Union Bill, Sinn Féin understands that citizens need trust and certainty in their dealings with all financial institutions. They must be satisfied that their investments are safe and cannot be plundered, pilfered or recklessly managed in an attempt to increase profits for shareholders or for senior officers of the various institutions. Government had and still has a responsibility to ensure there are adequate systems and checks in place to ensure no more financially disastrous surprises are visited upon the people. Consequently, we support the broad intent of this Bill and commend the Commission on Credit Unions, the Minister and the Department, and the wider credit union movement on their work because they were involved in bringing this legislation before the Dáil, but I repeat that bigger is not necessarily better or safer. We must remember that credit unions are generally smaller, community and volunteer-based institutions with a not-for-profit ethos and what is clearly necessary to regulate the banks, given their recent history and their continuing dysfunctionality, could cause irreparable damage to smaller credit unions.

Most of our specific concerns were laid our earlier. The proposal to apply 70 years of historic Central Bank legislation to credit unions without consultation is inappropriate and fails to recognise the fundamental difference between credit unions and commercial, for-profit banks. The new Bill affords sufficiently enhanced powers for credit union regulation. Likewise, the Central Bank (Supervision and Enforcement) Bill 2011 should be modified to reflect the different ethos, operations and management of credit unions. There should be right of appeal to the Irish Financial Services Appeals Tribunal in respect of any regulatory directive.

There is an urgent need for a simple, plain English memorandum of understanding between credit unions and their members and the Central Bank and regulators to ensure that regulation and regulatory practices are proportionate and transparent.

The width of bands for regulatory tiering of credit unions is too wide. We would argue that it must be based on a model of risk and business complexity rather than on size alone. The office of treasurer should be retained for the purpose of ensuring timely preparation and presentation of annual accounts.

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