Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Credit unions have invested in compliance and in improving their governance arrangements and internal controls. Those structures must now be funded because they come with additional costs. The reality is that credit unions need to be given the tools to allow them to compete in the Ireland of 2015 and to justify the costs involved in complying with that regulatory structure. New business opportunities, products and services are not being sanctioned. Not a single new credit union product or service has been sanctioned by the registrar in recent years.

Credit unions must be allowed to lend sensibly. Of course their lending has to be prudent. The restrictions that are currently in place are simply ridiculous. Last night, the Minister, Deputy Noonan, made great play of the fact that credit unions can now apply for a review of their lending restrictions. I assure the House that the review process is extremely onerous and expensive and involves a huge amount of work by the internal auditors of the credit unions. I will ask a fundamental question in this context. Why do they have to apply? The Registrar of Credit Unions has been crawling all over Irish credit unions in recent years. There have been on-site inspections. They have been through the books upside down and inside out. Credit unions are being put to the trouble, hassle and expense of making formal applications to have their lending restrictions reviewed. That should be done as part of the normal regulation of credit unions. The Minister should take that point up with them.

When the Minister spoke about the Credit Union Advisory Committee last night, he did not mention that it is a statutory committee that has to be established in law. Equally, he did not mention that there is no representative of the credit union movement on the advisory committee. That is a joke and should be amended immediately. The advisory committee's terms of reference are very narrow. It is not looking at fundamental issues like the overall business model, the need to modernise the structure and the appropriateness of the regulation that credit unions are facing. Why have some credit unions not been allowed to hold annual general meetings for four years? If the issues in the credit unions are so serious, the Registrar of Credit Unions should come out and say so, based on the level of work it has done to date. Why are credit unions being left in the dark? As I said last night, the healthy credit unions are not being told that they are healthy and that they should continue to do what they are doing. Equally, credit unions with problems are not being told what those problems are and how they can be fixed. This is not acceptable.

While the situation is quite bad, it will get much worse if the measures proposed in consultation paper 88 are implemented. Neither the Minister, Deputy Noonan, nor the Minister of State, Deputy Harris, referred to the consultation paper. I understand that the registrar and the Minister are about to sign off on the proposed measures. I will give an example of the profound implications that such a move would have. The proposal in consultation paper 88 to cap at €100,000 the amount of savings that a credit union member can hold would affect 55% of credit unions. I accept that it would affect a small number of members, but it would affect over half of credit unions. If this proposal is adopted, and credit unions are confined to holding a level of savings underpinned by the deposit guarantee scheme, it will send a negative and toxic signal that the registrar and the Government have no confidence in credit unions and will thereby do enormous damage to the credit union movement.

If the Minister and the Government want to help credit unions, they should press the pause button right now. Consultation paper 88 should not be signed off. A working group involving representatives of the industry should be initiated immediately to examine the appropriateness of the regulatory structure at this time. I am in favour of bringing it to the Joint Committee on Finance, Public Expenditure and Reform, but this should not be done after the horse has bolted. If these measures are signed into law by the Minister for Finance, we are heading for deep trouble. I would like to conclude by asking a fundamental question. Does this Government want to be the Government that presided over the gradual demise of the credit union movement? I am sure it does not. For that reason, this should be a watershed moment and a turning point. If this motion has achieved anything, it has put the future of the credit union movement firmly on the political agenda. I ask the Government to have a fresh look at the whole thing because the current approach is not working. Changes need to be made quickly. I commend the motion to the House.

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