Dáil debates

Tuesday, 24 November 2015

Credit Union Sector: Motion [Private Members]

 

10:10 pm

Photo of Derek NolanDerek Nolan (Galway West, Labour) | Oireachtas source

I thank the Fianna Fáil Party for bringing forward this timely Private Members' motion. It is appropriate we debate this in the House because it is the subject that is occupying the minds of credit union members, credit union boards and those connected with credit unions across the country. It is something that has raised fears perhaps not so much about the short-term view but certainly about the long-term view of the regulatory framework of the Department of Finance and those involved in policy-making as to what is, and should be, the credit unions' future role in society. Part of that is probably linked back to the early days of the credit union and just how much that ethos has changed. It has changed from being such a noble cause which has facilitated a group of people who have goodwill and who are motivated not by profit but by the idea of looking after those members who might need a handout or a few bob in a tough time, rewarding those members who lodge their money and being there in a time of crisis. It was almost a trade union-type response to combatting the moneylenders and those who would try to exploit people. The point credit unions have, through their success, reached is incomparable from their early days. Those involved in the credit unions at the very beginning will remember the suspicion and the raised eyebrows as if they were some kind of subversive movement trying to undo the banks or those in greater authority.

This is not a plug but one need only look at the credit unions in Galway, such as St. Anthony's & Claddagh and Naomh Pádraig. However, St. Columba's Credit Union has set up St. Columba's Credit Union Limited, SCCUL, a private limited company financed by members' funds. That company has been involved in so many area unrelated to the credit union. It has Ballybane Enterprise Centre, which has an incubation hub for small business, which is thriving and in which one cannot get a desk. It runs fund-raising for those who are in need of respite care and for counselling services. It is involved with the Brothers of Charity in Kilcornan, where it runs programmes to help people realise their potential and get back on their feet through therapeutic work. It is involved in business mentoring programmes. The SCCUL Ballybane Enterprise Centre awards, credit union awards, is one of the biggest business events in Galway every year, with hundreds of companies attending. The awards have the biggest business names in Galway, all acting as competitors but also as judges. It goes to show what the power and innovative mind of a voluntary system, without a profit motive, can achieve with volunteers' money invested properly in social enterprise.

When regulating the credit unions or attempting to confine them, sometimes I think we are still talking about the model that existed back in the early days and are not recognising that what has evolved is something much bigger, much more complex and much more professional and yet, importantly, still maintaining that crucial volunteer ethos. Let us not, with regulation and legislation, hamper or crucify that because it is something important and is succeeding rather well.

When I met credit union representatives in Galway, the issues raised with me were put forward in a straightforward, calm and rational way. There was no fear-mongering or no attempt to sensationalise. There was a list of issues that credit unions had serious concerns about.

The Government's amendment to the motion is probably one of the more conciliatory amendments I have seen in Private Members' time in a long time in that it certainly attempts to address the issues raised with me in the meeting I had and it tries to give some kind of a steer as to how the Government can deal with credit unions and engage with the independent regulatory framework. That is a question credit union members across the country are entitled to ask. They are entitled to ask why the Parliament, the Minister for Finance and those who they have elected to represent them are so prohibited from acting because there is an independent regulator. Perhaps the amendment to the motion is saying, "Look what happened when there was political interference, cronyism and a shoddy regulatory system crashed the economy". However, one is also entitled to ask, "What if we have gone so far that we are actually causing damage?". When this particular regulation is addressed, maybe we need to look at how much the people have a role in the regulatory framework. If the regulatory system does not look after people, then perhaps we have gone a bit too far.

On the issue of the €100,000, I accept the arguments put forward by Deputy Calleary. There are many bona fide reasons someone may have €100,000 in a credit union. It is not because he or she is getting paid big money or he or she is making a fortune. He or she may have sold a house, got an inheritance or has money received from somewhere else. The wording I am seeing today about the ability of credit unions to apply for the facility to do that sounds good but how will it work in practice? One of the points put forward to me by the credit unions in Galway and, I think, was put forward nationally was the idea of a tiered approach. Those credit unions which are bigger and which have better frameworks and better governance should be able to apply and those which are smaller and not as sturdy should be treated differently. Hopefully, this proposal being put forward will not be to say that two credit unions or one credit union would be able to do this but rather that a much more generous number and a broader sweep of credit unions, which meet defined, practical and pragmatic steps, will be able to exceed that threshold.

I want to lament a little. It is quite upsetting when one reads the Government amendment to the motion on credit unions, dealing with an issue that has been on the table for quite some time, that two of the engagements referenced happened in the same month we are debating in the Dáil a motion about a regulation that is imminent within the next five to six weeks. That is a wrong sign and it shows that political pressure from all sides of the House - it has been coming from myself and my party, and certainly from parties in the Opposition - had to get to such a stage that we would get that kind of engagement and such discussions going. That is lamentable. I am not sure what caused it. Whether it came from officialdom or the political side, it is wrong. Seeing it in the amendment to the motion disappoints me, as a supporter of the Government and as someone who has a strong interest and deep belief in the credit union movement.

The credit union movement must be clear about where it is going but from some of my engagements, I am not sure that distinct clarity is there as to where the credit union movement wants to go. It cannot become a bank, a voluntary bank or a building society. There is a difference between a credit union and a bank. That is something the members, the voluntary directors and voluntary participants all believe. A bit more work needs to be done on the credit union side in engaging with the members, public stakeholders and those who want to see it thrive as to exactly where it wants to go and perhaps that is not possible. Perhaps there needs to be flexibility, or direction needs to be sought. Certainly, the idea of debit cards and better banking facilities needs to be looked at but it needs to maintain something that is unique. The unique selling point, USP, of the credit union movement is that it is not a bank. It skirts that differentiation. If it offers the same services as a bank, then it is mimicking the model but how does one maintain that differentiation?

How credit union funds could be used to invest in social housing was discussed earlier. One aspect that can be pushed forward and used as a community development and social enterprise tool is the ability of credit unions to act like those in Galway and in other parts of the country. The credit union in Galway built a library, a Garda station and a community health office. It funded them in partnership with the Government and delivered fantastic facilities in one of the most challenged areas of Galway, in Ballybane. That centre is still standing and is still working. The library is also still there and is providing significant facilities. We should take that model and do everything we can with it. As for investing in social housing, what better use of members' funds could there be than to invest, in partnership with the State, in much-needed, community-needed good quality affordable housing? It is something their members need and their members' children need. The credit unions would get some return but it is likely to be far cheaper than what the commercial banks are willing to offer. Why not go down that route and develop it further?

Regardless of whether the motion is carried or lost, this debate will have very little effect. We have these debates every evening and they only involve our making statements. However, regardless of how the vote turns out tomorrow, I call for the promised consultation, engagement and bona fide interaction with the credit union movement and its stakeholders - via the Minister, the Registrar of Credit Unions or the consultative committee of credit unions - to be followed through on. While it is fine to speak the words and have the late engagement, if we are truly to live up to the words we will all say in the House tonight about our support of, belief in and strong hope for the future of the credit union movement, it will need buy-in from officialdom, the political process and those in the Registry of Credit Unions and the Central Bank. These are the independent people whose job is not to corral the movement but rather to help, develop, engage and produce a part of our financial sector that was, through all the bad times - and still is - the place people go for the few bob if their car is broken down and they cannot get to work or their children need something. It must be protected. The fact that the model has changed must also be recognised and worked with in order to develop.

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