Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important issue. He is referring to the report published last week entitled, Creating Credit, not Debt, by Mr. Georges Gloukoviezoff, UCD Geary Institute for Public Policy. It was jointly funded by the Social Finance Foundation and the Central Bank of Ireland. It proposes the establishment of a new personal micro-loan service, operated through the credit union movement, to assist people who have no access to loan finance through current mainstream banking and credit union loans. Access throughout the country to appropriate credit is a very important issue, one that the Government has worked hard to address. It has focused, in particular, on access by SMEs to micro-credit, including through the establishment of Microfinance Ireland. Microfinance Ireland is making it easier for businesses to start up, expand, succeed and create jobs by lending through the microenterprise loan fund which is targeted at start-up or growing microenterprises across all industry sectors. Such initiatives are bearing fruit, impacting on real jobs and providing vital support for business people and their families who are entrepreneurs. My colleague, the Minister of State with responsibility for business and employment, Deputy Gerald Nash, recently announced a revised scheme to allow more businessesto avail of this initiative.

Of course, there are also issues for families accessing appropriate levels of credit, many of whom are dependent on moneylenders at times of need. That is why the report is an important addition to the debate. It provides useful material on how a scheme could work and presents examples of such schemes in other countries. In considering the issue care must be taken that this is done in a way that addresses the real needs of those concerned, does not inadvertently pull people into further debt and does not expose financial institutions such as credit unions to unsustainable risk. It is a key issue with availability of any credit that the risk is appropriately assessed. On a number of occasions I have highlighted the Government's recognition of the important role of credit unions as a volunteer co-operative movement and also the importance of getting lending going in the economy. However, the issue of lending must be constructively considered in order to ensure a viable credit union sector into the future. As Minister for Finance, my role is to ensure the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions, while the registrar of credit unions at the Central Bank is responsible for administering the system of regulation and supervision of credit unions. The registrar has recently highlighted that while the valuable role of credit unions within their communities and, of course, the demand for credit from many members are fully accepted, it is important from a regulatory perspective that credit unions are prudent in how they lend money, particularly as it is the money of the saving members of credit unions that is ultimately lent to borrowing members. Ensuring these borrowers can repay is paramount in the protection of those savings.

Credit unions are undergoing a period of significant change with the implementation of new legislation and regulations and restructuring within the sector. The Government recognises that credit unions have played and continue to play a crucial and prominent role in meeting the financial, economic and social needs of communities. While credit unions have shown a willingness to embrace change, while staying true to their core values, the safety of members' savings and the security of the credit union sector as a whole remain priorities for the Government. The financial system in Ireland has undergone much change in recent years and we want to ensure all of society has access to the system. Tackling financial exclusion is essential. One element of this is access to banking facilities. In this context, my Department is looking at the development of a basic bank account. This will be featured in the transposition of the payment accounts directive which must completed by September 2016. The report from the Geary Institute for Public Policy at UCD is another useful addition to the debate on the best strategies to tackle financial exclusion. I note that the Citizens Information Board and the Social Finance Foundation both commented on the value of the report and I expect that there will be further work on the issue in the coming months. My Department will obviously carefully consider any proposal made.

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