Michael Conaghan (Dublin South Central, Labour) | Oireachtas source

Ireland is unique with regard to the scale and success of the credit union movement, one of the biggest developments in our social history and now an integral part of community infrastructure and life. This is something of which we should be very proud. There are 399 credit unions in Ireland, with 3 million members. More than any other country, Ireland has bought into the credit union movement and communities across the country have reaped the benefits of this development in the past 50 years.

Credit unions are run by volunteers and owned by their members. They sit at the heart of the community. This community ethos is the most striking characteristic of the credit union movement. For over 50 years, credit unions have encouraged saving and engaged in lending among their members.

They have supported communities and individuals in these communities on big and small projects. Credit unions have a particularly strong reputation for supporting the needs of disadvantaged communities and individuals. Small loans are regularly provided to people to assist them through difficult times, for example, to help a family pay for Christmas and to support young people to succeed in education. People who save their money in credit unions know that this money will be used in their communities to support those communities.

The Government recognises the vital role credit unions play in Irish society. In the programme for Government, it states clearly that it recognises "the important role of Credit Unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions". The Government's desire to reform and support the credit union movement properly, while taking the views of the movement fully on board, was recognised in the creation of the Commission on Credit Unions, which completed its work earlier this year. It has also been recognised in the legislation we are discussing and the wide consultation that has taken place around the legislation.

Despite the unique nature of credit unions, the financial collapse has highlighted clearly the need for them to be governed by robust regulation. The Irish League of Credit Unions went from a surplus of €15 million in 2009 to a deficit of €45 million in 2010. The Minister, Deputy Noonan, has estimated that the cost of recapitalising credit unions will be between €500 million and €1 billion. Credit unions affiliated to the Irish League of Credit Unions hold assets of €13.5 billion. Measures must be taken to ensure this is secure. Like any other financial institution, an individual credit union cannot be allowed to play fast and loose with the money of its members, or to take the kind of unacceptable risks that brought our economy to its knees.

The credit union is the people's bank. As it takes responsibility for the deposits of individual members and lends to members when needed, it needs to be regulated. In recognising the need to reform the regulation of credit unions, the programme for Government clearly states that a balance must be struck between "their not-for-profit mandate, their volunteer ethos and community focus" and "the need to fully protect depositors savings". The structure, ethos and business model of a credit union is vastly different to that of a commercial bank. As a result, a credit union cannot be treated like a commercial bank. Nobody is arguing with the need for robust regulation that will allow the credit union movement to develop into the future. However, this legislation must ensure the credit unions' flexibility and ability to respond to the needs of the community is not lost.

I conclude by thanking my local credit unions in Ballyfermot and Inchicore, which contacted me to outline their particular concerns about the impact that certain aspects of this Bill will have on individual credit unions. They are concerned about the effect of some governance provisions, such as the term limits to be imposed on directors, the prohibitions on membership of boards of directors and the status of the treasurer, on smaller credit unions in particular. I ask the Minister to outline how he proposes to address these concerns to ensure credit unions retain the flexibility they need.

I would like the Minister to explain the absence from the legislation of two simple items raised by the Irish League of Credit Unions which strike me as sensible and desirable. First, the sharing of services would allow for the provision of a broader service and would ultimately reduce costs. Second, credit unions should be allowed to provide funding to Government-backed or Government-guaranteed schemes and projects with a social or local benefit. I suggest that such investment should be encouraged at a time when every available resource should be targeted to deliver a social dividend in struggling communities.

We need to maintain a strong and vibrant credit union movement that continues to support communities and individuals. It should be responsible and well regulated and should remain responsive to the needs of the community.

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