Tom Fleming (Kerry South, Independent) | Oireachtas source

The credit union movement in this country has made a huge contribution to society. It has provided a culture of savings and prudent management of finance to thousands of individuals and families since it was set up by Nora Herlihy and her fellow pioneers and promoters of the Irish League of Credit Unions from its infancy. The movement has developed to its current number of approximately 400 registered credit unions and a membership of approximately 3 million, which is by far the largest pro rata membership of any country in Europe.

Following its inauguration in 1958 the credit unions mainly served the financial needs of disadvantaged communities and individuals who in many cases were denied access at the time to bank finance. Due to extensive community involvement in the administration of credit unions they have progressed to being a distinct alternative to banks, especially in the context of the current financial climate.

In drafting the credit union legislation we must be careful not to undermine credit unions or to kill them off. No bailout was required for credit unions, unlike other institutions which cost the taxpayer up to €60 billion. Credit unions do not provide large-scale commercial lending. They provide vital support to small businesses and the community enterprises to which they cater, usually with modest loans. The vast majority of such lending is for small businesses that cannot obtain funding from the pillar banks.

The many people who are involved in the operation of credit unions across the country have serious concerns about the proposed legislation. Despite statements to the contrary, little consultation has taken place with ordinary credit union activists who are genuinely fearful of the consequences of the proposed changes on credit unions and individual members. The proposal in section 15 to introduce term limits and overly restrictive conditions on board membership will have significant implications for the recruitment of new directors. There is also a major difficulty with section 20 which deals with the implementation of the proposed policy requiring the prior approval of the Central Bank for nominees going forward for election to officer positions. Further restrictions outlined in section 18 on the tenure of the chair, as well as additional responsibilities of monitoring his or her fellow directors, will cause serious difficulties for credit unions.

In section 24 the requirement to have a remuneration committee appears to indicate that in future directors will have to be paid for their services. That will impose further costs on credit unions and sound the death knell for volunteerism in the movement.

Despite the fact that the directors remain responsible for the control and direction of credit unions, the significant post of treasurer is being abolished. One would have thought that at this time when the clamour of corporate accountability and openness is deafening the post of treasurer, which provides the board with the required degree of oversight and inquiry, would be retained in some shape or form. Furthermore, it is the treasurer who reports on the credit union’s performance on behalf of the board to the general membership at the AGM, and as a result holds a special relationship with members.

Other anomalies must be addressed such as the position of tellers who are board members and who undertake part-time duty on the counter. In the event of a board meeting taking place on a particular night he or she would be unable to attend and would be prohibited, as such, from being a member of the board. It would have a negative effect, in particular on smaller credit unions if qualified and well-trained staff are banned from holding a dual function.

Last March the Commission on Credit Unions, which comprised the Department of Finance in conjunction with the Credit Union Development Association and the Irish League of Credit Unions, agreed a recommendation that would allow credit unions to invest in Government-sponsored projects and schemes. The provision has been omitted in the final draft of the Bill. The preservation and continuation of credit unions and their not-for-profit ethos and role in attaining the economic and social goals of members is paramount. The recommendation should be included in any proposed legislation we put to the House.

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