John Browne (Wexford, Fianna Fail) | Oireachtas source

I welcome the opportunity to comment on the motion relating to credit unions. I was a director of Enniscorthy Credit Union before I was elected to this House. Therefore, I am very much aware of the importance of credit unions in urban and rural areas. We must all accept that the credit union movement is critical to the economic and social well-being of communities throughout Ireland. There are almost 3 million members and nearly 400 offices nationally. Primarily, credit unions offer savings and loans services to their members. The importance of the credit union in every part of the country is highlighted by the fact that the sector employs 4,000 people and has almost 10,000 volunteers. That is an important mix. There are paid people as well as thousands of volunteers throughout the country who are prepared to give of their time freely and without cost to ensure that credit unions survive and continue to play a vital role in the economy.

The credit union is often referred to as the ordinary person's bank. It is for weddings, confirmations, communions and funerals. It is for people who need money in a hurry without having to go through the bureaucratic nonsense that exists in the banks at present. I can go to my credit union, make a case and apply for a loan. More than likely, within a week or three or four days I will get approved for the loan, particularly if I am a member of the credit union and I have built up a good credit rating throughout the years. What happens in a bank? To secure a loan I have to go in to the local bank and fill out forms on a computer. The girl working there may help me or she may not. I may have to do it myself. Then when I am leaving I will ask when there will be a decision. The reply of the staff is likely to be that they do not know because the decision has to go to Dublin. In other words, there are faceless people in Dublin making decisions on applicants for loans. They have no idea who the loan is for, what the applicant is like, what the credit rating is or whatever.

More often than not, bank employees in Dublin will refuse loans, because that is how banks are currently operating.

As I said, credit unions are places where people can go in their hour of need. They can save with the credit union and can make a personal case for a loan or money in a hurry. It is very important that the credit union structure remains in place. There is too much interference from the Central Bank and the regulator, and I hope the Minister for Finance, Deputy Noonan, who is usually full of common sense, does not allow them to dictate how credit unions should operate in the future.

Credit unions are co-operating in a shared service arrangement and implementing new regulatory and risk management systems. Some credit unions got into difficulty during the Celtic tiger era, but the number is minuscule compared to the number that exist in the country. There has been a change in the credit union structure in regard to regulation. There are now professionally qualified people working in the area and the movement has employed people who have a knowledge of finance and how loans operate. The overall regulatory framework within credit unions throughout the country has improved.

We have seen in the past number of weeks how banks have closed branches and restricted in-branch services, whereby they will no longer deal with the public, particularly the elderly and those with disabilities. People can lodge money in banks, but they will not see anybody. That is not the case with credit unions. If one calls into a credit union, one can meet the manager, staff and those working behind the counter, who will help and support one with whatever application or information one requires. In many parts of the country, credit unions are now the only local providers of financial services. However, credit unions are about to be hit with a wave of new restrictions on their activities before the end of the year. As Deputy Michael McGrath said, it is time for the Minister to pause and hold back. He should not rush into making decisions that will impede and restrict the operation of credit unions in the future.

One of the most serious of the new restrictions is the impending €100,000 limit on savings. This is an unnecessary limitation on customer choice. It will send out a signal that credit unions are less safe than competitor financial institutions. In a parliamentary question and during a previous debate in the House I asked the Minister for Finance to clarify the question of savings clubs. I am the chairman of the Rapparees-Starlights GAA club in Enniscorthy. We have a savings club that collects between €500,000 and €600,000 a year. We deal with the credit union in Enniscorthy, which provides a very good service and takes care of the issuing of cheques to customers. How will the club operate in the future if the limit is €100,000? Will we and other savings clubs have to break the structure of the scheme into five or six amounts of €100,000 each? The Minister did not answer my question. The Minister of State is from Wicklow and must know how credit unions operate. I am sure he will examine the issue and, in conjunction with the Minister, Deputy Noonan, examine how the problem can be resolved. If we or any other savings club have to leave the credit union system, we would have to go to the banks and would immediately be liable for charges. A savings club in Wexford has informed me that because of the charges imposed by banks it now has to charge savers €10 per person per year. Such charges do not exist in the credit union system and it is important that we get a satisfactory explanation of the issue.

People have built up savings over the years and have received lump sums from redundancy, retirement or whatever. Only a small number of people have more than €100,000 saved, but some people in credit unions have more than €100,000 saved, and they should not have to move from a credit union to a bank because of the restriction. It is one restriction that the Minister should reconsider before he makes any final decisions in this area. The recommendations of the commission on credit unions have been selectively and half-heartedly implemented to date, particularly those relating to the growth of the sector, which have been largely ignored. As I said, many credit union members have built up savings over the years and need more flexibility and latitude and a change to the €100,000 limit.

The proposed cap on savings, which has already caused reputational damage to credit unions, will drive funds from the credit union sector into the banking sector and will distort competition in the banking and credit union sectors, which is not a good thing. Credit unions should not be subject to bureaucracy, red tape and the same structures as banks. They operate in a different manner for different people, and it is very important that the role of credit unions, as a place where decisions are made quickly and decisively in the interests of members, should continue.

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