Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

We are here to deal with credit unions. If the Department of Finance, the Central Bank of Ireland and the credit union advisory committee can get the levies that will be introduced in this legislation so wrong, I question their handling of it in the first place. The Minister made nine references to this in the first document and has made nine corrections to it today. I supplied the statutory instrument references in question, Nos. 443, laid in the library yesterday, and No. 381, signed by the Minister on 28 September.

What is interesting about the latter is that the levies referred to in respect of those organisations were payable from 1 October 2012, a date which has passed, although the organisations have until the end of February to make the payment. The new statutory instrument of yesterday, which is not yet in Iris Oifigiúil, will probably not have legal effect until 21 Dáil sitting days have elapsed, if I am correct, although perhaps the period is 21 calendar days. The former would bring the date of completion to well into January. The Minister has produced a statutory instrument that is incorrect by a factor of 1,000.

That is a shoddy way to conduct business.

I formally ask the Minister to supply the relevant documentation which indicates who was responsible for preparing the statutory instrument to which I refer. Was it the Central Bank, the Credit Union Advisory Committee or the Department of Finance? Were all three involved? How was this mistake allowed to happen? Who within the three entities to which I refer signed off on a statutory instrument which contained incorrect information? I accept that the Minister is good at maths, but the person who placed the statutory instrument in question in front of him is not so good at them. It is not fair that he is being obliged to return to the House only one month after the original statutory instrument was signed in order to have the relevant references changed from "billions" to "millions".

On the legislation before the House, like most Members, I agree that the credit union movement is non-profit and community-based in nature. Like many sports and other organisations, it is based on democratic traditions. Credit unions in many communities have proud records. To a large extent, the movement has traditionally been staffed by volunteers, which is the reason for its success because these individuals know the people living in their communities. One of the key elements of the legislation is the limitation of the term of office of directors to nine years out of any 15. This will give rise to many new regulatory costs.

Credit unions have €15 billion in deposits and 2.9 million members. Most households are members of credit unions. Of the 403 credit unions, only approximately 25 are seriously undercapitalised. In total, 51 are undercapitalised to some extent. This means that some seven out of eight credit unions are in good and strong financial condition. Why fix something if it is not broken? The legislation is right, in principle, but it oversteps the mark in far too many instances. One out of every eight credit unions is in financial difficulty, but the other seven are not. The lazy approach being taken is that if one little problem arises, we change the rules as they apply to everyone else rather than deal with the problem to which I refer. We are placing many of the credit unions that have done good work in the past at a disadvantage.

The Bill introduces a levy of 0.2% on savings in respect of the deposit guarantee scheme being put in place. Some of the banks are actually moving away from the deposit guarantee scheme which relates to them, but we are intent on introducing such a scheme for credit unions. By and large, they did not present the same level of risk to the nation's finances as the banks over a period of years.

I wish to refer to a typical individual in my constituency who is involved with his local credit union. The individual in question is Mr. Tony Flanagan who has given me permission to use his name and who is involved with Portlaoise Credit Union. One can find people like him in every credit union throughout the country. He was involved in establishing the Army, Naval Service and Air Corps, ANSAC, Credit Union and has been involved in Portlaoise Credit Union, at every level, for 19 years. Under the Bill, his experience will be cast aside. What is being done is similar to informing a county board that its team has won an all-Ireland championship, that it has a good manager and chairman but that its time is up and all its members must depart. In the future one's term of office will be based on the calendar rather than on whether one is any good at what one does. We must reconsider the position on these time limits and, if appropriate, people should be made to step down. However, artificial time limits should not apply.

The Abbeyleix, Durrow, Mountmellick. Clonaslee, Mountrath, Portarlington, Portlaoise, Rathdowney, Mayo-Doonane and Carlow District credit unions contacted me about this matter. They are unhappy with various aspects of the legislation, which goes too far too fast. Credit unions are being informed that even though the bankers made the mistake, the solution is to be imposed on them. Evidence of this comes in the form of the introduction of a deposit guarantee scheme for credit unions when the scheme for the banks has almost passed its sell-by date.

On the time limits for directors, it must be recognised that most directors know the people who live in their communities. One must save with and have shares in one's credit union in order to have financial dealings with it. As Deputy Robert Troy stated, directors know the genuine cases. They will be aware, for example, of the families that do not have the money to pay student fees and are waiting for their grants to come through. These families will be able to obtain loans to tide them over until the spring or whenever the grants are paid because credit unions know their members. The credit unions' level of bad debts might be 7% or 8% of their total asset base, but that figure is small in comparison with those which apply to the banks.

We are intent on imposing a banking solution on the credit unions. This is because the banks want to squeeze the credit unions out of existence. The banks are reducing the numbers of their branches because they want to maintain an online banking system for most people. They do not want to be obliged to operate branches. When a person visits those branches still in existence, he or she is confronted with a machine which allows him or her to do his or her business without approaching the counter. One can make lodgements and pay one's bills without troubling any of the bank's staff. Now that they are pulling out of many locations in towns and cities, the banks do not want credit unions to be able to offer a good, strong local financial service. They have used their muscle - through the Central Bank and the head of financial services regulation - to ensure their concerns will be met. I accept that a few bad apples were identified - I refer to Newbridge and other credit unions - but that is no reason to put structures in place to penalise the seven out of eight credit unions that are operating well.

I accept the principle behind the legislation, but the reality is that it goes far too far. On Committee Stage my party will be tabling amendments designed to allow us to row back on some of its provisions.

See this speech in context