Derek Nolan (Galway West, Labour) | Oireachtas source

A taxi driver in my constituency is a friend of my family. He contacted me a number of weeks ago. He had an issue with his car and needed finance to get his car repaired so he could continue going to work and earn a living. Given the industry he works in, his income has declined dramatically over the past number of years, as is the case for an enormous number of people. His mortgage is in arrears. He goes to the credit union for finance. He went to his credit union in Galway and was told that, on the basis that his mortgage was in arrears for a period in excess of 12 months, he was not entitled to access credit and the credit union could not lend to him. He was told this was on the basis of a circular from the Central Bank issued to credit unions on 22 February 2013. The paragraph in the circular to credit unions on prudent lending states, "An important factor in determining creditworthiness in the current environment is whether a member is already in difficulty in repaying existing debt and in particular mortgage debt." The Central Bank expects "a credit union must be fully satisfied as to a member's creditworthiness and ability to service all debts before advancing any new credit or top up facilities". The paragraph suggest that if one is in trouble with debts and unable to manage them, which is the case with this man who is unable to meet his mortgage, they are not to be lent any money. He was refused a loan by the credit union in order to get money for his taxi and get back out on the road to earn a living. As a result of the phone call from my constituent and family friend, I made contact with a number of credit unions in Galway, St. Columba's Credit Union and Naomh Pádraig Credit Union, to get their views on how this is having an impact on customers. While it is not hitting them at the moment, it is working its way through and the credit unions are coming across examples where they are unable to lend to people in trouble because of their interpretation of the guidelines.

Another case arose in my discussion with St. Columba's Credit Union involving people who wanted to borrow money to buy a headstone for their son. They were in a similar situation, with an interest only mortgage for longer than 12 months, and the credit union believed it was prohibited from lending any more money to this type of person. The situation has undermined the spirit of what the credit union movement is about. The credit union is about this kind of case, where someone needs credit on a flexible basis and where the person is known to the credit union as someone in the community with a relationship with the credit union for years. Now, we are pushing people away from the friendly, accessible, fair system, with its community focus. We are running the risk of pushing people from the credit union to moneylenders and loan sharks when they are in desperate need. My friend was able to get finance from his family but if he had not been able to, he would not have had the money to put his taxi back on the road. This is not something I am making up; it really happened and is a problem. I ask the Minister of State to clarify with the Central Bank whether this is the case. The wording before me is what is in the circular. If it is being interpreted this way, it is wrong and the Central Bank needs to change it.

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