Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I move amendment No. 45:

In page 59, between lines 20 and 21, to insert the following:

"30.—The Principal Act is amended by the insertion of the following new section after section 84A (inserted by the Credit Union Act 2012):

"84B.—As soon as is practicable, the Bank shall enter into a memorandum of understanding with credit unions the form of which shall be agreed in consultation with credit unions and representative bodies.".".

We discussed this issue on Committee Stage. While I said earlier that I did not wish to rehash amendments, it was necessary to do so in respect of this amendment. This amendment seeks the insertion into the Bill of a new section to provide that as soon as practicable the banks shall enter into a memorandum of understanding with credit unions, the form of which shall be agreed in consultation with credit unions and representative bodies. It does not seek to put the memorandum of understanding on a statutory footing rather it makes statutory that a memorandum exist and that its content be agreed between the different partners.

There was confusion on Committee Stage about my proposal regarding a memorandum of understanding and the existing consultation protocol for credit unions. Credit unions believe there is a need for a memorandum of understanding which would resemble a customer charter. The purpose of the memorandum of understanding is to ensure the Central Bank and the credit unions are clear about what is required of them under the new regulatory regime. I am sure the Minister is well aware of the many instances of lending restrictions being imposed on credit unions by the Central Bank without any real explanation in this regard or, more important, without any guidance as to how they could remedy the situation.

Some credit unions, while not happy about it, recognise that restrictions in some circumstances are needed. When in place, they are happy to comply with them. However, credit unions want clarity on what they have to do for these restrictions to be eased or lifted. More recently, credit unions have had onerous requirements imposed on them at one of their busiest times, namely, during preparation for their AGMs. We all know that the timeframe in respect of the AGM process is very strict in that members must be notified at least 21 days in advance of all of the different arrangements that must be in place to facilitate the AGM. In several cases, the Central Bank has instructed credit unions to carry out a full asset review of loans, investments and fixed assets in the middle of the AGM process. This has caused the delay of some AGMs. Given that the credit union movement is a voluntary and democratic organisation, the knock-on effect of this in terms of member confidence is not good, in particular given that the asset review could have been undertaken during June or July. There was no reason it needed to be undertaken during the middle of the AGM process. This may be due to a lack of understanding of how the movement works and the importance of this element of it.

The memorandum of understanding should set out reasonable timeframes for future dealings with the Central Bank and the credit unions. It is important to say that the memorandum of understanding is not only about what the Central Bank is doing rather it is about making clear the responsibilities of credit unions under the new regulatory regime. The detail of the memorandum of understanding will, as provided for in the amendment, be worked out by the implementation group which consists of representatives of the Central Bank and credit union movement. Placing the production of a memorandum of understanding on a statutory footing is, in my view, the only way to ensure this will happen. I strongly urge the Minister to accept amendment No. 45.

Let us consider what problem could arise as a result of the Minister accepting this amendment. I have read the consultation document. It is a different animal to a memorandum of understanding. It outlines how the Central Bank will consult with the credit union movement when introducing regulations. Ireland is currently party to a memorandum of understanding with the troika. As such, the Minister knows well what it means, namely, it is a clear understanding between two parties of what is expected of them. Obviously that detail should not be put on a statutory footing but there should be a requirement to put in place a memorandum of understanding.

I referred earlier to situations wherein suspicion could arise. I have given incidents of where the Central Bank has not been clear as to why it has imposed limits on credit unions or what they need to do in such situation. I also referred earlier to the Central Bank forcing credit unions to undertake asset reviews during the AGM process. There needs to be a clear understanding of what is expected of both parties. In my view, a memorandum of understanding can only enhance the process. It fits well with the commission report on credit unions and with the Credit Union Bill 2012. All sides can only benefit from a formal memorandum of understanding, which will ensure a greater understanding of what is expected of them. This should be complemented by the consultation protocol currently in place.

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