Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

On the question of investment, the Government accepts that the credit union movement has always been a key component of local investment. It more than any other financial institution has its eyes and ears on the ground. It knows who needs funds and who needs to be supported and is in a perfect position to make the call on these needs. The model of prudential judgment shown by credit unions vis-à-vis what we have seen within our retail banking sector over the course of the past decade is markedly different. One could argue that much of that commonsense knowledge of one's customer base so evidently clear within the credit union movement is exactly the kind of quality we need in our new banking system in terms of understanding risk and the issues that go with it.

I agree there is potential in this area and the Minister has accepted that. The issue he raised on Committee Stage was whether there is a need for this in primary legislation, for example, if as a result of the consultation an agreement was forged requiring some protocol or regulation to be established with the Central Bank. The question then would be whether there was a need for this in primary legislation. The Minister has an open mind on that. He was very clear on Committee Stage that the commission report recommended a formal process of engagement with the representative organisations, particularly with the ILCU. He is open to this and would like to hear more on that. However, whether there is an opportunity for that between now and the taking of the Bill through the Seanad is a matter for the Minister. Discussion is taking place on this between the Office of the Attorney General and the Department of Finance in this regard.

It is worth pointing out that the key problem the retail banking sectors found themselves in related to the difficulty in terms of their loan to capital ratio, a problem never replicated in the credit union movement across the country, apart from a few exceptions. In any argument about lending practice and investment, taking on board what Deputy Broughan said about existing limitations and the total asset base of a credit union, one must always be mindful of how much can be lent and for what purposes. This is an issue to which some consideration must be given, because the existing requirements are quite exacting. They give a clear indication to the credit unions as to what they can or cannot lend, particularly under section 44 of the 1997 Act.

Whether the kind of social housing developments to which Deputy Boyd Barrett referred would be applicable under the existing Act is arguable, given the existing limitations. However, this is a matter for consideration and the Minister has an open mind on it. There is a fundamental question as to whether it is necessary to include this in primary legislation. Would it not be more sensible if we came to some agreement on it for it to be done by way of regulation? This is something we will consider in due course. For that reason, we do not propose to accept the amendments.

The issue of shared services has been raised and is also the subject of the next amendment, but perhaps I will come to that later.

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