Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I listened carefully to the contributions from all sides of the House and it appears there are three commonalities in that regard. The first is a real appreciation of the role played by the credit union movement in Ireland, the second is an acceptance that some form of regulation is required and the third is agreement that the Bill as it stands must be changed to ensure that the credit union movement is not damaged by inappropriate regulation.

The rampant rabid capitalism of the banks went unmuzzled in this country during the boom and therefore we are naturally inclined towards further regulation. However, the credit unions are not banks. I had the privilege of working with the World Council of Credit Unions in Washington looking at how to provide savings and loans products to some of the most vulnerable communities on earth. As we are aware, credit unions do not maximise profit.

They reinvest profit according to their members' wishes. They are non-profit organisations providing an invaluable service in communities in Ireland and across the world. Much play has been made of the fact that a small number of branches got themselves into financial difficulty. We know some of them invested in property in ways that did not work out well and got themselves into financial difficulty. To suggest, however, that this means the credit union movement in Ireland traded recklessly is incorrect. We are aware the credit union movement has received no State aid whatsoever and its financial position is very different from that of the banks. Recently, I met with one of the management team of a credit union in Wicklow to go through its numbers. Its financial position is so healthy that it could pay out all of its members’ savings using just its cash reserves while not even touching its investments. It would be impossible to have a run on this credit union, which indicates an extraordinary level of financial health. If we are not careful, this Bill will impede the ability of healthy and sensible credit unions to do the most good they can, particularly when the joke that is the banking system is sucking all of the money out of our economy and refusing to lend it back.

Do we need regulation in this sector? Yes, we do. Does the Bill get that regulation right? No, it does not. I, along with many other Deputies, have spoken to representatives of the credit union movement. It is interesting to note the serious and substantive problems they have with the Bill as it stands, which have been raised by many Members during this debate. I wish to raise three of these concerns. First, the governance rule whereby a member of a credit union board can have no family member working as a volunteer does not make sense. This is a volunteer-led movement and, particularly in the smaller unions, branch workers are saying that if this is imposed it will radically alter their ability to serve the public. Second, section 35 automatically prevents a credit union member who has rescheduled a loan for whatever reason from getting another loan. These are not people defaulting on large loans and looking to borrow even more but parents looking to borrow money for Christmas presents or school uniforms. To prevent someone who has restructured a loan - not defaulted on it - from taking out another loan is not sensible. Third, I would urge that the Government consider allowing a softening of the bar on credit unions under certain conditions. This is the geographical rule that Deputy Wallace spoke about earlier.

I look forward to further discussions on the Bill on Committee Stage. Its passage will be quick; this morning the Taoiseach said it would be passed before Christmas. I will be submitting amendments reflecting the issues I have raised. I urge the Minister for Finance to be open to this debate. There is clear support for the legislation on all sides of the House. My experience of legislation in this House is that once it is agreed on Second Stage, no substantive changes are made, contrary to what our Constitution encourages. Ireland has the deepest penetration of credit unions in the world. They are a credit to their workers, their volunteers and their members. The credit union approach is superior to that of small-scale community savings and loan banks and, in many aspects, to the banking system. We need regulation, but it needs to be appropriate. According to the well-thought-out criticism of the credit union movement, this Bill is not yet right. I hope that on Committee Stage the Minister will be open to accepting amendments to ensure we get this legislation right.

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