Emer Higgins (Dublin Mid West, Fine Gael) | Oireachtas source

I congratulate the Minister of State. I know she has been engaging with the sector and I have had some positive feedback from members of my credit unions on the work she is doing on the ground. I know that will be the tempo the Minister of State has set in the Department. I wish her well in her new role.

There is great opportunity and untapped potential within our credit unions. We have an opportunity to expand community banking services. The withdrawal of Ulster Bank and KBC Bank added an urgency to things. I know from one of my local credit unions, Tower Credit Union in Clondalkin, which is now also in Rathcoole and Citywest, that there has been a considerable transfer of new current account business since the decision of Ulster Bank and KBC Bank to close. We all agree that the credit union sector has gone through substantial change over the past ten years but it remains vital when it comes to our communities. I was delighted to be able to welcome the Minister, Deputy Donohoe, to Palmerstown Credit Union last year to showcase the great service that it provides in our local community. We would welcome a visit from the Minister of State to any of our credit unions. Palmerstown is one of a number of phenomenal examples of great credit unions that are adapting to the changing landscape in banking, technology and social media. We have also had a spate of mergers and consolidation in the sector locally. We have seen Rathcoole Credit Union closing and relocating to Citywest. That has been a considerable disadvantage to us in Rathcoole, particularly to people who do not drive. We have also had the Clondalkin Credit Union, the Four Corners Credit Union and Neilstown Credit Union merge to form Tower Credit Union.

Many credit union directors have complained about the growing regulatory burden on volunteer boards and because of that there has not been a rebalancing of responsibilities between the volunteer directors and management. The reforms in this Bill address those concerns and will rebalance responsibilities adequately.

I also welcome the provision to allow credit unions to seek consent from members to receive the annual accounts by electronic means. Tower Credit Union in Clondalkin advises me that this will save it significant amounts when it comes to printing and postage costs, as well as the cost of somebody doing this work from a time-saving perspective.

A number of provisions in the Bill are designed to facilitate a focus by the board on strategic planning rather than just operational issues. This is also a welcome move because it will enable greater collaboration among credit unions and allow them to take equity stakes in corporate entities to share resources and opportunities. That is an important reform. There has been much complaint that the Central Bank’s strategy was to keep merging credit unions into larger entities. However, as the previous speaker said, they may potentially lose their community focus in this way. The enabling of credit unions to take equity in corporate entities allows them to retain their individual independence while being able to lend members' funds productively, at scale and in conjunction with other credit unions.

Irish credit unions nationally have a loan-to-asset ratio of 28%. This means that €5.5 billion of their €20 billion assets is lent productively and the rest is in bond investments and on deposit in the remaining retail banks. This is not desirable or sustainable. The founders of the Irish credit union movement never intended for only 28% of members' savings to be lent productively. This Bill makes provision for the establishment of corporate credit unions, a new type of regulated vehicle. I would like to see reform to allow credit unions to establish lending vehicles to support SME innovation and expansion in the domestic market, as well as supporting social enterprises in the community and funding the provision and purchasing of housing.

There have been many advocates for an expanded community banking sector to replace the closed bank branches across the country. It is important that credit unions are key stakeholders in any expanded community banking network. There are many SMEs that would benefit from the type of relationship that banking had traditionally been offered through credit unions. I would be interested in the Minister of State's views on how this legislation could advance the establishment by credit unions of corporate entities to support SME growth and development, and whether that can be established with other community institutions like post offices, the Strategic Banking Corporation of Ireland, SBCI, or local authorities.

Credit unions in Ireland have a bright future. When the retail banks closed branches or withdrew from the Irish market, the credit union movement remained steadfast. It remained rooted in communities up and down this country and this legislation will allow credit unions to lend more of their members' savings productively, which is welcome. I express my gratitude to the 2,500 volunteers, staff and customers who are the backbone of the credit union movement in Ireland. I especially thank those working in Palmerstown, Lucan, Clondalkin, Rathcoole and Citywest.

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