Tom Hayes (Tipperary South, Fine Gael) | Oireachtas source

I pay tribute to the great work done by people working in credit unions. I recognise the special role credit unions play in the financial sector in Ireland and am keen to ensure the viability of credit unions nationwide. It is clear, however, that systemic failings in the regulation of the financial sector in recent times have led to the requirement for the State to bail out our banks at enormous cost to the taxpayer. Although I certainly do not wish to tar credit unions with the same brush, I accept that the outdated legislation from 1942 needs to be updated.

The credit union sector has performed well in comparison to the banks, but some 30 credit unions have received emergency funds from a rescue scheme set up by the league that represents the sector. It has been reported recently that worried regulators have 100 credit unions under close supervision because of fears about rising loan arrears.

These comprise one quarter of the credit unions in the State. Thousands of loans at the affected credit unions are not being repaid and this is putting huge financial pressure on their balance sheets. The State has set aside millions of euro to allow it to deal with weaker credit unions. I hope the merger of weaker credit unions and their stronger counterparts will allow the credit union movement to emerge from this process in a healthy financial position.

The Credit Union Bill 2012 largely reflects the recommendations set out in the final report of the Commission on Credit Unions which was published in March. The commission included representatives of all stakeholder groups in the credit union sector. The Irish League of Credit Unions was centrally involved in the Bill's development, drafting and finalisation. The league is not only a signatory to the agreed report, it also co-authored it. It is important that all those who drafted and agreed to the commission's report continue to stand foursquare behind it, particularly as the difficulties being faced by credit unions and the scale of the challenge ahead require steadfastness and leadership at all levels of the movement. The viability of the sector can only be secured through a fundamental reform of how credit unions are run and regulated. The Bill legislates for this reform and is designed to ensure the credit union sector will never again be brought to the brink.

I am a great believer in the whole idea behind the credit union movement. Credit unions can play a leadership role in local communities. Above all, their strength lies in the fact that they have knowledge of the local people with whom they deal. The banks did not possess such knowledge, which is why difficulties arose. Credit unions possess an abundance of the knowledge to which I refer. I hope the enactment of the legislation before the House will lead to the emergence of strengthened and better credit unions that will serve their members and the communities in which they are located.

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