Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

Mar a dúirt mo chomhghleacaí, cuirimid fáilte roimh chuid den Bhille seo. Is rud fíorthábhachtach é ionas gur féidir leis na AGMs tarlú agus tá sé sin fíorthábhachtach do na daoine atá ag brath orthu.

I welcome this Bill, which makes provision for the holding of certain meetings by credit unions via remote access. We have discussed in this Chamber the importance of credit unions being able to hold their AGMs. It is something that has been raised with me by a number of constituents and several credit unions. It makes absolute sense that this is being dealt with now, in light of the very real risk to human life posed by Covid-19. It will allow, by way of amendment to the Credit Union Act 1997, for attendance and voting by proxy at certain meetings.

We know the key role that credit unions play in communities. There is a credit union beside the estate I live on and I have been a member of it since I was a very small child. The credit union is a financial centre for many communities. That is especially the case at this time, when we are looking at the possibility of Ulster Bank leaving the market and the closure of many bank branches. When branches close, there is a loss of local knowledge relevant to funding for loans and so on. Local knowledge is key when making decisions on the granting of loans. I have spoken to the manager of a credit union who raised the concern that its AGM, which would usually cost approximately €30,000, with the production of booklets and all that kind of thing, may now carry an additional cost of €5,000 to €8,000 under the provisions in the Bill. It is necessary and important that the AGMs go ahead but it is also important to be aware of such concerns.

There is a need to look at the credit union sector in a broader sense. We need to look at what credit unions can do, what activity they might be able to branch into and the very real crisis they are facing. From speaking to staff in several credit unions in recent months, they have made it clear that we can no longer ignore the scale of the crisis facing credit unions. Nor can we ignore the opportunity for the sector to step into the breach if the likes of Ulster Bank were to leave the market and there are ongoing closures of other bank branches. Those closures can have a significant impact on communities. Regulations have been placed on the sector that have put credit unions at a competitive disadvantage relative to the banks. That has stymied their ability to lend and is strangling their ability to give customers the facility to borrow. Lending regulations introduced just a few months ago allow credit unions to lend only 7.5% of their assets for secured loans such as houses, with larger credit unions being possibly allowed to lend up to 15%. This was brought in by the Central Bank as an advancement of regulation. According to the credit union staff to whom I have been speaking, it is far from it.

We need to consider whether it might be better for the credit unions to set their own lending limits. That may not be the way to go but we certainly need to look at what they can lend. Obviously there must be limits, but the situation must be looked at because the credit unions feel they are stymied. More than 50% of the consumer credit market is for mortgages.

How can credit unions ever offer a real alternative when this restriction is in place? The Central Bank is increasing the risk for credit unions by not allowing them to have more balanced loan books. We hear that credit unions do not have the nature, scale or complexity to offer mortgages. We need to ask whether they could broaden their activities. We know the great impact they have on communities and their local knowledge, which is very important. Draft figures show that credit unions collectively made a surplus of approximately €65 million in the year prior to 30 September. On the other hand, Permanent TSB reported a pre-tax loss of €57 million in the first six months of the year. Ulster Bank is reported to have plunged into loss and may be preparing to exit the market. In a very unfortunate development, Ulster Bank refused to appear before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to explain its actions and what it intends to do. Credit unions clearly have the capability and capacity to step into the breach. It is great to see community-led organisations that can help their local communities.

Credit unions are also at a competitive disadvantage with regard to the regulations governing their investments. The foreword of the Central Bank's feedback statement to its consultation paper on potential changes to the investment framework for credit unions stated: "We are strongly of the view that lending and the provision of services to members should be the key drivers of sector viability". It notes that revised investment regulations would necessarily impact on the level of return. The Central Bank thus acknowledges that investments by credit unions are safe, but they are still unable to hold the same reserves for investments as for loans. That has a real impact on ordinary people.

Furthermore, I refer to the share caps credit unions are obliged to implement. A credit union in the south of Dublin has restricted members' holdings to €20,000. Another one in north Dublin has restricted its members' holdings to €15,000. Members are unable to access a mortgage through their credit unions, while a young person cannot save for a deposit on a house with their local credit union. That is quite concerning, because credit unions can have a great relationship with their customers.

My colleague, Deputy Pearse Doherty, mentioned IFAC and the proposed third term for members. That is a concern. IFAC has served us well, and this is not a reflection on any of its members. However, a limit of two terms was set for a reason. We should stay within those limits.

This Bill is welcome. We need to examine the credit union sector and its potential. The Minister of State has previously spoken of the importance of the sector, but we have not seen bang for our buck in that regard. We need to look at what credit unions can do, especially in light of the large number of bank branch closures. The credit union sector has always been very good to its members and has always exemplified that favourite word, "prudence". Credit unions have always been very careful. We need to support them however we can and they are currently telling us that they are facing a huge crisis.

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