Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

Fine Gael's policy on credit unions could be summarised as "credit unions are great, but...". I have been a Member of the Dáil for seven years, during which time I have heard every Member, in every corner of the House, speak about the wonderful nature of the credit unions, how integral they are to community life, how they are an example of people doing things for themselves and about the voluntarism at the centre of this finance model. However, when it comes to the Government taking the necessary steps to set the credit unions free and allow them to function properly, it refuses to take them. I am fearful that, despite the Government's nice words, its policy is to run the credit unions down. It identifies the difficulties that there may be within the credit unions, but it does not come up with solutions to fix some of them.

I commend the work of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in drafting the report which tells us what most representatives actually know: that the credit union movement is an essential part of the social and economic fabric of the nation. When the banks destroyed the country, the credit unions kept many families out of poverty. Now that the banks are posting billions of euro in profits, paying no tax and reaping more profits from a dysfunctional system, the credit unions are still doing the hard work of providing credit for families and communities. In 2011, for example, there was talk of €1 billion black hole in the accounts of the credit unions. We are in 2018 and nothing has come to pass in that regard. The credit union movement has actually come out of the crisis as strong as ever.

The attitude of the Central Bank of Ireland towards reform has not been positive for the credit unions. From lending rules to failures to keep promises, the credit union movement has not been treated fairly by the Central Bank. There are issues to be dealt with such as loan-to-asset ratios which are too low. The credit union movement is training and advertising to grow the number of loans, but we cannot separate this from lending restrictions that are too harsh. The section 35 limitations need to be reviewed. This has been asked for by the advisory committee and in the report. There should be no further delays in establishing the review. The limitations are stifling the credit unions and impacting on their ability to serve their members and communities. The promise of tiered regulation must be implemented in a real way. Please let us not have more lip service on this issue. Tiered regulation was to be about the proportionate application of regulations, taking into account the individuality and diversity of credit unions. Instead, we still see a blanket approach being adopted of maximum regulation, regardless of size. This points to the uneasy relationship between the credit unions and the Central Bank as regulator. There is scope for an independent third party to act as an appeals mechanism against the Central Bank's systems. It could help to build trust and allow for conciliation.

The regulatory reserve ratio must be looked at. It is simply an arbitrary number which does not take into account the risk profile of individual credit unions and the maturity of the movement. Sinn Féin is disappointed by some elements of the Central Bank's investment rules. An alternative rule based on a minimum investment grade for bank bonds could be put in place instead of the severe restrictions on credit unions in investing in bank bonds. Let us not forget what the legislation states. The Credit Union and Co-operation with Overseas Regulators Act 2012 states: "... the Bank shall have regard to the need to ensure that the requirements imposed by the regulations made by it are effective and proportionate having regard to the nature, scale and complexity of credit unions, or the category or categories of credit unions, to which the regulations will apply”. Previously that provision formed the basis of clear registrar guidelines on investment exemptions. There are no reasons this cannot be done again.

All of these issues relate to the Central Bank. I am sure we will hear a phenomenally sympathetic Government tell us how much it cares, but sympathy is no replacement for action on this issue. There are possibilities through primary legislation that could bring about some solutions. For example, there are a rake of outdated practices with which credit unions are forced to comply such as sending hard copy AGM invites instead of electronic updates. The threshold for the grant of probate and small payment provisions could be increased. These are just some of the examples on which legislators in this House could walk the walk, as well as talk the talk.

The most glaring aspect of what the credit unions have told us is the billions of euro they wish to plough into social housing provision. We are all aware of the housing crisis, but we have a Government that is seven years on the go that simply cannot join the dots. It is absolutely unforgivable that this issue has not been resolved. Sinn Féin has made very specific proposals in its submissions to the consultation process on investment rules. There are ways to do it. It could be facilitated by the creation of a specific fund, from which tier three approved housing bodies could apply on a rolling basis for loan assistance for the purchase, renovation or building of social housing. Funding could be approved on a 100% or perhaps a 70% basis, with the Department of Finance providing 30% of the funding through AHB funding mechanisms that are already established. Loans could be repaid via a 30 year availability agreement between the approved housing body and the local authority housing department. The agreement would cover the repayment of the loan and a small premium to cover management and maintenance costs. In the case of larger approved housing bodies, if the appropriate finance was made available, an additional 2,000 to 4,000 social housing units could be built.

Sinn Féin supports the proposal made by the Irish League of Credit Unions to allow for the provision of €347 million annually in AHB loans to be built up incrementally to €1 billion over six years. The composition of the fund in terms of governance, board membership and so on could be decided on following discussions between the Central Bank, the Department of Housing, Planning and Local Government, the Irish Council for Social Housing, the credit unions and the AHB sector. That is the type of proposal a government that was not keeping its hands warm would actually seek to follow.

The overall message from the committee's report is that credit unions are both a movement and a force for economic and social good, that they have some problems but that their biggest problem is the State. That is the fact of the matter. Instead of seeking to empower and encourage, time after time the Central Bank's rules restrict and suffocate. Nobody wants light-touch regulation, but the movement deserves what it has been promised for so long, namely, tiered regulation reflecting its abilities. I hope this message is heeded.

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