Michael Kitt (Galway East, Fianna Fail)
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We were dealing with amendment No. 6 before the debate was adjourned. Does Deputy Doherty have anything further to add?

Pearse Doherty (Donegal South West, Sinn Fein)
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I have nothing to add on the amendment. I welcome the Minister of State, Deputy Hayes, and hope the Minister for Finance provided him with a note to the effect that he is very open to all of the amendments in this group. The Minister engaged very well on Committee Stage and I hope that engagement continues.

Tommy Broughan (Dublin North East, Labour)
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I strongly support the comments made by Deputies Doherty and Boyd Barrett regarding amendments Nos. 6 and 8, which are being discussed with related amendments Nos. 9 and 10 in my name. Amendment No. 9 reads as follows:

In page 10, between lines 45 and 46, to insert the following:

“(5) A credit union may lend to State guaranteed projects which are in keeping with the objects for which credit unions are formed as stated at section 6 of the

Credit Union Act 1997.”.”.

In page 10, between lines 45 and 46, to insert the following:

“(6) Nothing in the foregoing will prevent a credit union from providing certain services, to be prescribed by the Bank, to a credit union or a member of another credit union registered under this Act.”.”.

I support amendments Nos. 6 and 8 and ask that amendments Nos. 9 and 10, which are closely related, be accepted so as to permit this development. The Minister of State will be aware of the issue of credit union service organisation. The Commission on Credit Unions expressed strong support for the development of linkages between credit unions to give them extra financial clout, connectivity and to provide local economic democracy as an alternative to the banks, which have failed us so badly.

Michael McGrath (Cork South Central, Fianna Fail)
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I support this group of amendments. We had a good discussion on them on Committee Stage and they were withdrawn then on the basis of a commitment by the Minister to review the situation. The key issue is section 12 of the Bill, dealing with investments. While the Minister stated that there is no explicit prohibition on credit unions investing in State guaranteed projects, section 12 is quite restrictive in that subsection (2) sets out certain investments that are permitted and then there is a general provision in subsection (3) that any other investments may be prescribed by the Central Bank. We are seeking, with these amendments, that there would be specific mention of credit unions being empowered to invest in State guaranteed projects which involve no additional risk for the credit unions. Of course, this would be done on the basis that funds that are on call cannot be invested because customers must be guaranteed access to their deposits at any time. However, where a credit union has surplus funds and there are relevant projects in the areas of education, enterprise or health which are being promoted by the State, where the return is guaranteed, then it makes eminent sense that credit unions be permitted to benefit from those investments.

Brian Hayes (Dublin South West, Fine Gael)
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I thank Deputy Doherty for his remarks. I have been following the very constructive debate that has been taking place in the House and I hope that my entrance onto the pitch does not stale matters at this late juncture.

I am replying to amendments Nos. 6, 8, 9 and 10 and will go through the issues raised by the Deputies. Deputy Doherty moved amendment No. 6; Deputy Boyd Barrett tabled amendment No. 8; and Deputy Broughan tabled amendments Nos. 9 and 10. The first issue dealt with by these amendments is that of investment by credit unions in State projects. The commission report recommends that a formal process of engagement be established between the credit union representative bodies and Government to determine safe ways to invest collective credit union funds in community projects, employment initiatives and small co-operatives. The Minister remains open to proposals from the credit union movement on this front and the Department is available to engage with credit union groups and other relevant players to explore how this can be done. The Minister would like to hear more from credit unions about the types of projects they have in mind and how they see this working, whether in the form of a public private partnership or some other arrangement. However, I must emphasise that any such projects would have to accord with the main investment requirements in the Bill. First is the requirement that the investment would not involve undue risk to members' savings. It is important to remember that the billions in cash held by credit unions belong to the savers who can call their money on demand and it is not spare money, as such. Second, the potential impact on the credit union must be assessed beforehand, including the impact on the liquidity and financial positioning of the credit union. Third, the funds to be invested must be those which are surplus and not immediately required.

It is worth noting that section 44 of the Credit Union Act 1997 already provides for a credit union to establish a dedicated fund for social and cultural purposes and many credit unions use such funds to support local projects in their own area. An amendment is not required, in the view of the Government, in order to facilitate this as section 12, to which Deputy McGrath referred, is already broad enough to provide the necessary framework for such investments, provided they can be made without undue risk to members' savings. On Committee Stage the Minister undertook to examine the wording to see whether some further clarity could be provided and this is currently under discussion between the Department and the Office of the Attorney General. On that basis, I do not propose to accept the amendments concerned with investment in State projects.

The second issue raised by this group of amendments is that of shared services, which is also referred to in amendment No. 7. The commission report notes that services may be shared in a number of ways, including the establishment of central credit unions, corporate credit unions, credit union service organisations, CUSOs, or local alliances.

Shared service arrangements are already in operation in the credit union area, for example, the payments services provided by the Credit Union Services Co-operative. The commission recommended that the establishment of such shared service arrangements should be facilitated by legislation where necessary. The Government agrees that the sharing of services offers credit unions an opportunity to benefit from economies of scale and allows them to access expertise they may not otherwise have sufficient resources to engage. This may become more important in the future given the increasing complexity and running costs expected in a modernised regulatory framework and an enhanced service offering.

The Irish League of Credit Unions has accepted there is no obstacle to establishing shared service arrangements at credit union level. I do not propose to accept the amendments on CUSOs because there is no need to provide for them in legislation. CUSOs are not regulated financial services providers and do not require to be regulated as such by the Central Bank. The Bill already sets out provisions on outsourcing to ensure that services can be shared safely.

The concept of sharing of services at member level, which is more commonly referred to as shared branching, involves the establishment of an entity, usually a company or co-operative, to provide certain back office services to credit unions on a shared basis. This can reduce costs, enhance expertise and improve efficiency. Shared branching is a different concept which involves credit unions providing front of house services to each other's members and is an activity which operates primarily in the US credit union system. Shared branching was not considered by the commission and does not form part of its final report. Shared branching was not a key issue in the submissions received by credit unions and other stakeholders in the public consultation process nor did it emerge from survey returns from credit unions.

In simple terms, shared branching would allow a credit union member to use the services of another credit union. As the Minister noted on Committee Stage, for shared branching to work certain measures would have to be put in place. First, a settlement system would be needed to prevent an individual from withdrawing his or her savings several times over from different credit unions. Second, underwriting would be required to establish proper assessment of ability to repay at the credit union issuing the loan on behalf of a member's home credit union. We would also need to clarify whether the member's credit union or the issuing credit union would be responsible if a loan went into arrears. Third, an accompanying prudential framework would be required to ensure proper liquidity management practices are put in place to guard against large and unpredictable withdrawals at credit unions connected to larger institutions. Furthermore, shared branching raises fundamental questions about the common bond notwithstanding the commission recommendation that it should remain unchanged.

However, the fact that shared branching is apparently successful in other jurisdictions suggests that it is an option worth exploring. While I consider that it would be premature to provide in legislation for shared branching at this stage I am open to hearing the arguments for it. As the Minister indicated on Committee Stage, he has requested the credit union advisory committee to prepare a report on the possibility of shared branching within the credit union sector by the second quarter of next year. The report will involve an assessment of the current appetite for shared branching among credit unions and their members, an analysis of the framework requirements to support shared branching, an exploration of the various alternative approaches drawing on international expertise and best practice and the recommendation of the committee on any legislative changes that may be required. The report will be prepared through an open process involving consultation with credit union stakeholders, including representative bodies, the Central Bank and other experts, such as the credit union supplies forum. Officials from the Department of Finance are available to discuss further details. The consultation process will allow the committee to indicate what will be required in terms of legislation and whether an appetite exists for the kind of model my colleagues have described. When the report is furnished to the Minister he will consider it, bring it to Government and take action if appropriate.

Pearse Doherty (Donegal South West, Sinn Fein)
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While I appreciate the indication from the Minister of State that he will consider the wording of section 12, I do not see why the amendment I tabled on behalf of Sinn Féin cannot be taken in order to provide clarity in this area. There may be nothing to restrict lending and I am willing to withdraw my amendment if this is what the Minister wants to achieve but I seek to include explicit wording to ensure that social lending to State guaranteed projects is not precluded. The problem with section 12(2)(a), (b) and (c) is that the type of lending permitted is variously stipulated in terms of banks, society and the Central Bank. Clarity in this area would be beneficial to all of us because it would allow credit unions to invest in State guaranteed projects provided they can show us the money. The State has projects that it would like to develop but it cannot find investors. If our home grown, not-for-profit institutions are willing to invest, we should ask them to do so. The amendment I have tabled states that nothing in the Bill prohibits a credit union from lending to a State guaranteed project. Perhaps a caveat should be added to ensure compliance with section 12. I ask the Minister of State to reconsider the matter.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Whatever we may think on this side of the House, the Government often pleads that it does not have the money it needs for the investment and stimulus programme we would like to see. With the credit union movement, we have an institution with money which wants to assist the State and its citizens in stimulating the economy by backing projects that would create jobs and pay social dividends. I understand the Minister of State's argument that the State has an obligation to ensure credit union members' funds are safe and sensibly invested but given that credit unions have to put their money in the banks, one might ask how safe are the banks. The credit unions are asking to be enabled to invest in State guaranteed schemes not just any old scheme.

The credit unions are offering money the State says it needs at low interest rates, as long as they are guaranteed a return. I do not know exactly what the credit unions have in mind in terms of how this would work. However, having chatted with them, I understand one example of the sort of thing they might consider would be a social housing project. There is general agreement in this House that we spend too much in moneys to private landlords in rent allowance. If we built local authority houses, that rental revenue would return to the State and would, therefore, be guaranteed. There would also be guaranteed savings in terms of the money paid out in rent allowance. This could be quantified roughly. If the credit unions lent €1 billion, the State could build 10,000 council houses and then receive extra revenue of approximately €120 million per year. The State could guarantee the repayment of the loan and the interest on it and we would have the extra social housing we need. That is the sort of scheme the credit unions and their members would like to back. The State could confidently offer a guarantee because it knows the revenue would be secure. There would be definite savings and a definite revenue return.

On the shared services, the Minister is saying that while not against the idea, the Government's concern is for the welfare of the credit unions and their funds and for whether they have the infrastructure to provide shared services without endangering the solvency and liquidity of individual credit unions. My understanding of what the ILCU suggests in this regard is that the Bill would state that they would be enabled to provide these services, but the Central Bank would put whatever conditions it wished in place to ensure the necessary infrastructure and safeguards were in place. Therefore, there would be conditions on the credit unions moving in this direction and these would be regulated and laid down by the Central Bank. What the credit unions want is the removal of any possible impediment to them moving in this direction. This is a laudable aspiration and is in the interest of credit union members and of offering choices to people in the financial services area. The Government should co-operate with the credit unions in facilitating this.

Tommy Broughan (Dublin North East, Labour)
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I welcome what the Minister of State said regarding the advisory committee and the negotiations which he hopes will be finalised by the end of the second quarter. However, I still feel it would benefit the credit union movement if he accepted some variant of the three key amendments with regard to the social projects, because that would clearly provide a legislative basis for involvement. As the Minister of State is aware, the final report of the commission on credit unions asked for shared services and for the possibility of investing locally to be considered on a legislative basis. Perhaps we could shorten the process by considering these amendments.

The Minister of State referred to section 44 of the 1997 Act. We are all familiar with the credit unions and many Deputies are members of unions which have been involved in projects in the social and cultural area in their localities which provide valuable support for local sporting and artistic bodies and so on. However, the limit on the amount that can be spent in this way as prescribed in section 44 of the 1997 Act is 0.5%. Therefore, there is a major constraint on involvement. The example given by Deputy Boyd Barrett, social housing, is a good example of how the credit unions could be involved. One of the appalling results of the current situation is that the social housing programme has effectively collapsed. We are looking for new models, not just of management, but of provision. The Taoiseach gave a commitment there would be a public housing investment programme provision and I hope this will be confirmed over the next week. We desperately need a programme as there are 100,000 people on housing lists.

This Bill offers an opportunity to make this provision in legislation, notwithstanding the point made that the Minister of State will come back on this. Perhaps he should look at the issue again when putting forward amendments in the Seanad.

Brian Hayes (Dublin South West, Fine Gael)
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On the question of investment, the Government accepts that the credit union movement has always been a key component of local investment. It more than any other financial institution has its eyes and ears on the ground. It knows who needs funds and who needs to be supported and is in a perfect position to make the call on these needs. The model of prudential judgment shown by credit unions vis-à-vis what we have seen within our retail banking sector over the course of the past decade is markedly different. One could argue that much of that commonsense knowledge of one's customer base so evidently clear within the credit union movement is exactly the kind of quality we need in our new banking system in terms of understanding risk and the issues that go with it.

I agree there is potential in this area and the Minister has accepted that. The issue he raised on Committee Stage was whether there is a need for this in primary legislation, for example, if as a result of the consultation an agreement was forged requiring some protocol or regulation to be established with the Central Bank. The question then would be whether there was a need for this in primary legislation. The Minister has an open mind on that. He was very clear on Committee Stage that the commission report recommended a formal process of engagement with the representative organisations, particularly with the ILCU. He is open to this and would like to hear more on that. However, whether there is an opportunity for that between now and the taking of the Bill through the Seanad is a matter for the Minister. Discussion is taking place on this between the Office of the Attorney General and the Department of Finance in this regard.

It is worth pointing out that the key problem the retail banking sectors found themselves in related to the difficulty in terms of their loan to capital ratio, a problem never replicated in the credit union movement across the country, apart from a few exceptions. In any argument about lending practice and investment, taking on board what Deputy Broughan said about existing limitations and the total asset base of a credit union, one must always be mindful of how much can be lent and for what purposes. This is an issue to which some consideration must be given, because the existing requirements are quite exacting. They give a clear indication to the credit unions as to what they can or cannot lend, particularly under section 44 of the 1997 Act.

Whether the kind of social housing developments to which Deputy Boyd Barrett referred would be applicable under the existing Act is arguable, given the existing limitations. However, this is a matter for consideration and the Minister has an open mind on it. There is a fundamental question as to whether it is necessary to include this in primary legislation. Would it not be more sensible if we came to some agreement on it for it to be done by way of regulation? This is something we will consider in due course. For that reason, we do not propose to accept the amendments.

The issue of shared services has been raised and is also the subject of the next amendment, but perhaps I will come to that later.

Pearse Doherty (Donegal South West, Sinn Fein)
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I would like to make a final point on the issue of social lending. The Minister of State has indicated that he will examine the wording of section 12. I would like him to include in the section a specific reference to the fact that guaranteed State-backed projects can be invested in.

Brian Hayes (Dublin South West, Fine Gael)
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The Deputy is referring to State-guaranteed projects.

Pearse Doherty (Donegal South West, Sinn Fein)
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It is something we should encourage. There have been discussions on the banks in this House previously. I will stay focused on the legislation at hand. We have had a constructive engagement on it. This House has previously discussed the question of burden-sharing with banks including Anglo Irish Bank. It has been argued that some credit unions have made their investments in the form of subordinate bonds. If the State wants to build capital projects and invest in guaranteed products in the economy, we should make it clear that we are encouraging this form of activity. I think the introduction of regulations is probably not the way to go about it. The Minister of State has indicated that he will consider section 12. He mentioned the legal advice that is being examined. I would like to impress on him the importance of making this provision as explicit as possible. If that is done, we should remind the credit union movement, which has a particular ethos, that this money has been made available. At a time when the State is in dire financial difficulties, we should be calling on the credit union movement in that way. Obviously, it will do that for a return. If it is asking for too much, the State should not proceed in this way. We should put it up to the credit union movement because it asked for this legislation to be amended so that it clearly states that credit unions can lend to State-guaranteed projects, with all the caveats in terms of making sure the money is not on call and the amount being loaned in this way is limited to a certain percentage. If we put it up to the credit union movement, it will not be found wanting. I encourage the Minister of State to bring this point to the attention of the Minister before this Bill goes to the Seanad.

Michael Kitt (Galway East, Fianna Fail)
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I call the Minister of State.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I have an amendment down as well.

Michael Kitt (Galway East, Fianna Fail)
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My understanding is that the mover of the amendment can speak three times.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I am a mover as well.

Michael Kitt (Galway East, Fianna Fail)
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Deputy Doherty is the mover in this instance. Four amendments are being discussed together.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is it only the mover of the first-----

Michael Kitt (Galway East, Fianna Fail)
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There is only one mover. In this case, it is Deputy Doherty.

Tommy Broughan (Dublin North East, Labour)
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It is kind of a lottery.

Michael Kitt (Galway East, Fianna Fail)
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The Deputy is an expert on the lottery.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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On a point of order, when am I supposed to move my amendment?

Michael Kitt (Galway East, Fianna Fail)
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Obviously, it can be moved individually but it cannot be discussed at that stage.

Brian Hayes (Dublin South West, Fine Gael)
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They are all being discussed together now.

Michael Kitt (Galway East, Fianna Fail)
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Does the Minister of State have anything else to say in response to Deputy Doherty?

Brian Hayes (Dublin South West, Fine Gael)
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I have nothing else to say. We will consider the matter in due course. If we are to put this into primary legislation, we will need the representative organisations to buy into it. That support is not there currently, but that is not to say it could not happen in the future. If the organisations express a unanimous view, or a near-unanimous view, the question of whether this should be done by means of regulation through the Central Bank or by means of legislation will arise. I will raise what the Deputy has said with the Minister, Deputy Noonan, in advance of the Seanad discussions.

Michael Kitt (Galway East, Fianna Fail)
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As amendments Nos. 7, 11 and 13 are related, they may be discussed together.

Pearse Doherty (Donegal South West, Sinn Fein)
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I move amendment No. 7:

In page 9, between lines 33 and 34, to insert the following:"7.—The Principal Act is amended by the insertion of the following new section after section 26:

"26A.—(1) A credit union may, once the approval of the Bank has been secured and the necessary capacity and infrastructure put in place, promote, invest in, loan to, and/or contract with a credit union service organisation approved by the Bank (on such terms as the Bank considers appropriate) and engaged in activities and services of the credit union service organisation related to the routine daily operations of credit unions.

(2) Nothing in this section or the following provisions of this Part affects the operation of any enactment which is not contained in this Act and which, in whole or in part, relates to the provision of credit union service organisation activities or services.

(3) Credit union services organisation activities or services may include but are not limited to the following:

(a) clerical, professional and management services:

(i) accounting services;

(ii) internal audits for credit unions;

(iii) credit union risk and compliance;

(iv) management and personnel training and support;

(v) marketing services;

(vi) research services;

(vii) procurement related services;

(viii) debt collection services;

(b) electronic transaction services:

(i) automated teller machine (ATM) services;

(ii) debit card services;

(iii) electronic fund transfer (EFT) services.”.”.

I have amended the initial amendment I proposed on Committee Stage to make it clear that these services cannot be commenced without the explicit agreement of the Central Bank and to provide that it cannot be done unless the individual credit union involved has demonstrated that it has the capacity to deliver such services. Some of the issues the Minister mentioned earlier, such as possibility of a credit union being caught out when money is withdrawn, would be dealt with because the Central Bank would have to approve it and the credit union would have to show it has the capacity to deal with it. All of that background work would have to be done.

The purpose of this amendment is to detail the kinds of shared services that could become available to members if credit unions have the required capacity and the support of the Central Bank. It is about detailing the future direction we want the credit union movement to move into. In the section of its report dealing with additional services, the Commission on Credit Unions states that it supports "a new regime for the provision of additional services". It is clear in the report that such services include both member-level shared services and back-end shared services. I urge the Minister and the Minister of State to consider this area. I agree with the concerns they have expressed in this regard. This should not be introduced overnight because the credit union movement is not ready for it, as far as I am aware. As I have said, this issue has been discussed by the commission.

A survey of credit unions outlined the five key areas where they would like shared services to be developed. In the case of electronic fund transfer services, it does not need permission anyway. There are four other areas. In fairness, the recommendations that have been made in this regard make it clear that the commission does not intend to specify the products that credit unions should or should not provide. The report makes it clear that "a new regime for the provision of additional services should be developed within the context of the tiered regulatory approach as set out in greater detail earlier in this Chapter". I urge the Minister of State to examine this recommendation. The credit union movement needs to be able to facilitate its members in the best way possible. While it is important that robust regulations are introduced on foot of this Bill to ensure credit union members and the State are protected - obviously, the State is having to step in with citizens' money in this case - it is also important that there is a future pathway for the credit union sector. This sensible amendment was modified after I listened to what the Minister had to say on Committee Stage. I am not saying that these services will be provided - I am saying that these services could be provided. That will not happen until the capacity of the credit union movement has been developed. The double catch is that it will not happen without the explicit approval of the Cental Bank.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The amendments before the House, which are of the same nature, relate to what has been termed "shared banking". The Irish League of Credit Unions is well aware of the need to protect the funds of credit union members and to ensure the necessary infrastructure is in place to support any move towards the provision of shared services to members. Obviously, there is no question of running into this blindly without the necessary regulations, protections and infrastructure. In light of the need for that level of regulation and protection to be in place, it is equally valid to say nothing should impede credit unions that want to move in this direction. If we were to pass this Bill without using it to spell out the fact that credit unions which might wish to move in this direction will be facilitated when they are ready to do so, it would seem to be a huge missed opportunity.

I believe the credit unions are being eminently reasonable in this. The obvious point to make is that, as the Minister of State has said, by and large - with a few exceptions - the credit union movement is not in trouble, has not acted in a reckless fashion and is very responsible in how it uses and protects the funds of its members. Its general orientation is such that it is far less likely to engage in a reckless manner, as we know the banks did with gusto.

It is fair to accede to this request that the Bill should set out the right of credit unions to move in this direction, but with all the protections and caveats that would be necessary to ensure they are actually capable of doing that and protecting credit union members. It is quite possible for the Government to come up with a formulation that deals with those concerns, given the need to be cautious, while on the other hand facilitating the credit unions to move in this direction. It is something that will be of benefit to citizens in providing them with an alternative to the commercial, for-profit retail banking system.

Tommy Broughan (Dublin North East, Labour)
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It was at the 2010 AGM of the Irish League of Credit Unions that the CUSO - credit union services organisation - or shared services idea was approved by the member credit unions. They had obviously done a lot of research about the idea of shared services, shared branches and developing the attributes that would be necessary to promote a network approach. The amendments I and my colleagues have put forward concern these types of service - for example, internal audits, risk and compliance management, HR, marketing, research, procurement and debt collection.

One can understand why, following the passage of this Bill, credit union members would want to develop this type of facility. However, one of the issues I raised earlier was the lack of a detailed regulatory impact analysis of the additional costs that will be imposed on credit unions by the passage of this Bill. Compliance management, risk management, HR, marketing, research and procurement are all areas in which there will be obvious economies of scale and sharing of costs, which could be advantageous to the credit union movement if the CUSO idea of shared services is allowed to proceed. As one response to the far tighter regulation which I critiqued in my first contribution earlier, and given that the Government has not provided a detailed impact analysis of the Bill, there would seem to be enormous merit in proceeding down this road. The Irish League of Credit Unions is also of this view. It would, of course, be a historic development for the credit union movement. If electronic banking can be developed in branches across the country and throughout Northern Ireland, we would be talking about a real alternative for ordinary people to the present banking network, which has failed us so badly in the current crisis. There is much merit in incorporating these carefully chosen lines which the Deputies and I would like to see inserted in the Bill. I ask the Minister to accept this.

We have had discussion with the Commission on Credit Unions and there is a recommendation that we revisit this issue in legislation. This is perhaps the opportunity for the Minister to examine the matter. I accept it would be another remarkable milestone in the history of the credit union movement in this country but, given the types of constraint under which credit unions operate in terms of liquidity, solvency and assets, it would also be another important economic tool and facility for all the people of this island who are members. I urge the Minister of State to accept the amendments.

Michael McGrath (Cork South Central, Fianna Fail)
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I support the amendments and I put forward a similar amendment on Committee Stage. Amendments Nos. 7, 11 and 13 relate specifically to CUSOs and the sharing of services at the level of the credit union. The Minister's response on Committee Stage was essentially that this is actively encouraged and is already happening - I know it is happening in west Cork, for example. The view he expressed was that by explicitly listing the functions, we could actually be narrowing the scope of what credit unions could do.

There was a separate debate on the issue of sharing services at member level, which the Minister of State has again referred to as shared branching, a term the credit unions do not like, although we understand what the Minister of State means by that. There was a separate amendment on this point on Committee Stage, amendment No. 11, which we withdrew on the basis of a commitment that the credit union advisory committee would examine it and engage with the stakeholders. As I interpret it, the amendments we are now discussing relate to the sharing of services at credit union level.

Brian Hayes (Dublin South West, Fine Gael)
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I understand no legislation is needed for that. It can happen, so prescribing it in law is not required. The Minister's point on Committee Stage was exactly as Deputy McGrath has suggested - namely, that by specifying such areas, one might well be precluding areas around which there could be the potential for greater co-operation in the future. On the question of additional services, which is really the issue, my understanding is that once this Bill is established, there is nothing to prevent a credit union or group of credit unions applying to the Central Bank for the purpose of additional services. It is then a matter for the Central Bank to create regulations in this regard.

The report of the Commission on Credit Unions states:

The Commission recommends that a new regime for the provision of additional services should be developed within the context of the tiered regulatory approach as set out in greater detail earlier in this Chapter. Within this new regime, decisions to offer (or apply to offer) new services can be taken by the board of directors. It was suggested that the issue of additional services be designated a standing item on credit unions’ AGM agendas which would provide an opportunity for a two way exchange of information ...

Pearse Doherty (Donegal South West, Sinn Fein)
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We need to be careful that we are not mixing things up. We know there are additional services that credit unions can provide. These have to be approved by the AGM and so forth, and the credit union would then apply to the Central Bank. If it is approved and has the capacity to provide the additional services, it can provide them. We also know the position with regard to shared services at the back end. The concern is in regard to shared services at member level. This is where the Bill is lacking, in that it does not stipulate the process whereby such shared services can happen at member level. There are the CUSOs, whose "activities or services may include but are not limited to ...", as the amendment states.

The wording rules out the concern the Minister of State and Deputy Michael McGrath have raised that this could limit the type of shared services to be provided because it is clearly stated that those are the services that may be provided but it is not limited to them. The purpose of the amendment from the point of view of the Oireachtas is to ensure that this is way we would like to see the credit union movement evolve in the future, but we will not allow it to do so unless it has proven it has the capacity to do it and that it has satisfied the Central Bank. We would be saying that, as a Parliament, we want to see the credit union movement, which has a fantastic history – there have only been a couple of black marks against smaller institutional members – go in this direction. If the credit union movement wants to keep up with where people are at, we need shared services at member level but we are putting in two very clear restrictions. The section might never be enforced or perhaps none of the institutions will be able to meet the criteria set out.

This is about signalling to the credit union movement that such a change is possible. It is not happening currently. I welcome the Minister's commitment to refer the proposal to the commission. If he accepted the amendment he would still have to refer it because there is much work to be done in the background to ensure it could go ahead. As we heard from Deputy Broughan, some of the work is already under way but it must be dealt with by the advisory group. The intention of the amendment is to send a signal. I am happy to withdraw the amendment if the Minister of State would consider a suitable formulation to the same end. The legislation is burdensome – rightly so in certain areas – in terms of regulation, and a signal is being put down for shared services at member level in the future.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The points have been made but I will put one other argument. The Minister of State could call me a conspiracy theorist.

Brian Hayes (Dublin South West, Fine Gael)
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Deputy Boyd Barrett is a conspiracy theorist.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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It is highly likely that the commercial retail banking system would not be enamoured by the idea that credit unions could offer a greater level of shared services for members. We are talking about front-office services not back-office services. I accept the Minister of State’s point that there is no obstacle to the latter currently. This is about credit unions, through sharing services, being able to offer a wider range of services to their members which they are somewhat limited in their ability to do at the moment. I suspect – one could call me a conspiracy theorist – that the for-profit banking sector would not be terribly pleased with that and could lobby intensively at some point in the future behind the scenes or in some way try to exercise influence to prevent credit unions moving in that direction. I do not suggest the Government would be in any way complicit with such efforts by the banking system but it is not beyond the bounds of possibility that a private banking system would use its influence to try to prevent credit unions offering an alternative to its network. From that point of view it would be useful and it would give the credit unions confidence if it were explicitly stated that the legislation allows for the future development of shared front-office services for members of credit unions with the necessary conditionality on the need for regulation, protection and infrastructural capacity. The Minister should examine the matter and consider how we could come up with a formulation that sets that out in the legislation while putting the necessary protections and safeguards in place.

Tommy Broughan (Dublin North East, Labour)
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The information I have from the Irish League of Credit Unions is that the capacity exists in up to 150 credit unions to develop shared services, not just back-office services, and they are ready to approach that milestone.

Great minds sometimes do think alike because I also am concerned that there would be political pressure from the larger banks. I accept we own most of them now. Pressure was brought to bear prior to the 1997 Bill and earlier Bills, perhaps going back as far as 1960, to ensure that the credit union movement did not become a serious competitor to branch banking for households and small businesses. That concern exists. I again appeal to the Minister of State to examine the formula. Perhaps following the Seanad debate he could return to the House with a proposal on shared services.

Brian Hayes (Dublin South West, Fine Gael)
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On the subject of the larger banks I am sure everyone was pleased to hear the good news from today; for the first time in four years AIB managed to obtain a bond of €500 million on the open market. That is good news in the circumstances for a bank which is currently wholly ours. Good news came from the Bank of Ireland only two weeks ago that moneys were raised independent of the guarantee. It is a tentative sign of some normalisation in terms of the international money markets being prepared to lend to Irish banks again.

My understanding is that the Minister had a long discussion on the matter on Committee Stage and he has an open mind on it. We do not have a difficulty with the concept if there is a great appetite across the credit union movement for shared services, but we must demonstrate that the appetite exists and there is a capacity and willingness to do so.

The Minister will ask the group that is to be established to report to him on the issue by the second quarter of 2013. Part of the assessment will be on the appetite for such a service, the requirement framework and how it would work, and to examine from an international perspective how it has worked in other jurisdictions. Deputy Broughan raised the latter point in his contribution.

If there is agreement, then the Minister will come forward with legislative change. His view is that it is premature at this stage to make provision for something that might not be required on the basis of an assessment. The issue did not feature in the commission’s recommendations, which says something in itself. I do not wish to second-guess what colleagues have said as matters come on the agenda as an administrative model changes and moves, but it was not on the agenda in terms of the commission’s report. If there is an appetite for such a change and a willingness to put such a system in place locally the Government would want in the first instance to hear about it. That is why we are asking that the possibilities around the matter would be established. When the report comes to Government in the middle of next year we will be in a better position to judge the potential for it on the ground, as it were. If there is a willingness to move the process forward I do not see the Government standing in its way, but to do it in this way – to put it in place without the debate – would be illogical. It would be more sensible to have the debate first to ascertain the level of interest and then if that is on a mainstream basis across credit unions, provision can be made for it. That is the Minister’s position.

Pearse Doherty (Donegal South West, Sinn Fein)
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To be fair to the Minister of State and the Minister, they have said they will move the issue forward following examination by the advisory group. I welcome the Minister of State’s comment that he expects the report by the middle of next year. The Minister has given an indication that if the capacity exists the Government will not stand in the way of such a change. That said, I genuinely believe provision should be made in the Bill at this point. Putting it in the Bill will not present a danger but it will set down a commitment that this is the way we would like credit unions to operate, but it will only happen if they can meet the mark and the criteria set down and it would leave the final say with the Central Bank.

The Minister of State asked about the appetite for this. It exists; the ILCU has been lobbying both the Government and the Opposition for member-level shared services. Beyond that, as any member of a credit union or anybody who knows about them will realise, it just makes sense that credit unions should share services in this day and age. They must not be left behind and I do not want to see them left behind. I agree with the Minister of State's comments in regard to banks and raising money on the international markets, which is great progress. However, I also want to see great progress for the credit union movement so that it can reach its full potential in years to come.

This Bill could have been a statement of intent by the Oireachtas that we want to see the movement develop and flourish, but its purpose is to provide tight regulation for a sector that needs to be regulated. Nobody is opposed to that, but we also want to see it grow. I am disappointed in that element and also that the Minister of State did not agree to the suggested change even though I have tweaked this amendment since Committee Stage. I am trying to inform the Minister's opinion and influence him when he brings amendments to the Bill during its passage through the Seanad. I will not press the amendment now because it may be considered again at Seanad level, but I ask the Minister of State - and the Minister, Deputy Noonan, if he reads this transcript or is briefed on it - to consider the amendment. There is no reason not to include this measure in the Bill. It would be a positive statement.

Rightly or wrongly, there is a fear among credit union members, both volunteers and management, about the Central Bank and about regulations that reveal a lack of understanding of the credit union movement. The move proposed would be a positive one. This Government has already redesigned banks in this State. Some have been merged with others; we have made some into pillar banks, have taken on ownership of others and have got rid of deposits in certain banks. We have done all of this in the past two years, and we did it because there is a direction in which we want to see retail banking going in this country. What is missing in this Bill is that type of direction for the credit union movement. It is very much about regulation, which is important, but this step would have given a positive signal. I will leave it at that. I welcome the positive steps taken but am disappointed this one did not go the other way. I hope there will be a change of mind in the Seanad.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Do we move an amendment and then withdraw it? Is that how it works?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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One can press an amendment if it has been moved.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Has amendment No. 8 been moved?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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No; it was discussed with another amendment. It is only a technical point.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I understand that, but if an amendment is not moved does that mean we can discuss it at a later stage?

Michael McGrath (Cork South Central, Fianna Fail)
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This is Report Stage.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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No. The Deputy discussed it already. It is merely technical.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Does one have to move an amendment to be able to withdraw it?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Yes. If it is not moved, nothing happens. The Deputy is not moving it and it will be recorded as not having been moved.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I hope the Ceann Comhairle is not pulling a fast one.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I am not. I am afraid my job here is purely technical.

As a point of information, sometimes a person formally moves the first amendment in a series. The others are discussed along with the one that was moved but when it comes to their turn they must be formally moved before they can be pressed. Does the Deputy understand?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Thank you, a Cheann Comhairle.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 13:

In page 17, after line 48, to insert the following:“14.—The Principal Act is amended by substituting the following for section 48:

“48.—(1) A credit union may promote, invest in, loan to, and/or contract with a credit union service organisation approved by the Bank (on such terms as the Bank considers appropriate) and engaged in activities and services (‘CUSO activities or services’) related to the routine daily operations of credit unions.

(2) Nothing in this section or the following provisions of this Part affects the operation of any enactment which is not contained in this Act and which, in whole or in part, relates to the provision of CUSO activities or services.

(3) CUSO activities or services may include but are not limited to the following:

(a) clerical, professional and management services:

(i) accounting services;

(ii) internal audits for credit unions;

(iii) credit union risk and compliance;

(iv) management and personnel training and support;

(v) marketing services;

(vi) research services;

(vii) procurement related services;

(viii) debt collection services;

(b) electronic transaction services:

(i) automated teller machine (ATM) services;

(ii) debit card services;

(iii) electronic fund transfer (EFT) services.”.”.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Amendments Nos. 16 to 22, inclusive, are related and will be discussed together. Amendment No. 17 is an alternative to amendment No. 16, which arises from Committee Stage proceedings.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 16:

In page 19, to delete lines 25 to 27 and substitute the following:“(a) an employee of the credit union;”.

My concern with certain aspects of the Bill - which I am trying to amend - is the way in which the Bill impinges on volunteering. Up to now, anybody could come forward at an annual general meeting and stand for election to the board of directors and be elected. That is covered here under section 15. The fear within the membership of the ILCU is that we are putting impediments in the way of that facility, telling members they can elect only certain people while there are others whose franchise is to be restricted to some extent. We are also introducing term limits in an area, although there are no similar limits in corporate governance in general, particularly in family-owned and developed businesses, where people can continue to be directors for a number of decades, often brilliantly so, while employing a number of workers during their period of office. We are introducing restrictions that we do not impose in the banking sector and are thereby putting up a higher hurdle for credit unions.

I refer briefly to amendment No. 16, which deals with exclusions from the board of directors. These include an employee or voluntary assistant of the credit union in question, or an employee or voluntary assistant of any other credit union. In the amendment I try to recast that, stating instead that employees of the credit union are excluded while volunteers are allowed to serve at all levels of the organisation.

Amendment No. 18 is in a similar vein and proposes that the words "or a member of the board oversight committee of any other credit union" be deleted. It relates to people who are members of vocational credit unions but who might also be members of their local credit unions in Monaghan, Carlow or wherever. They might have great experience in working for a large vocational credit union and under the Bill they will be excluded from serving on the boards of their local credit unions.

Amendment No. 19 proposes the deletion of the words "a director of any other credit union". This would encompass the same situations to which amendments Nos. 16 and 18 refer.

On amendment No. 20, in the past we have always encouraged those very talented men and women involved with the credit union movement. As stated, we owe a great deal to the women of Ireland because they were involved in founding the movement and have often been responsible at local level for running audit committees and taking on supervisory roles. They have kept the movement moving forward which has enabled people to literally put bread and other things on the table in their homesteads. We should reconsider excluding the persons to whom I refer from proceeding to serve on representative bodies such as the Irish League of Credit Unions, ICLU, or the Credit Union Development Association, CUDA, which has a smaller number of credit unions that are often highly developed.

Amendments Nos. 21 and 22 relate to the exclusion of persons in arrears for 90 consecutive days and voluntary assistants. In effect, all members of credit unions are under some debt obligation to them. Circumstances could arise where someone might have slipped into arrears, but surely he or she would have shares in his or her credit union, etc. I have made the case for such individuals not being excluded.

I was not present when the Select sub-Committee on Finance took Committee Stage of the Bill, but I did monitor the debate which took place. My three colleagues on the Opposition benches strongly supported the maintenance of the concept of voluntarism. Outside sport, the arts, politics and the church, this is one of the areas in which people are delighted and proud to serve their communities on a volunteer basis. I must question whether the exclusions provided for in the Bill in respect of directorships are appropriate. Those of us who have served as directors in companies know that there must be a very clear divide between employees and chief executives and the oversight boards and various committees which run such companies. In view of the nature of credit unions, excluding volunteers in this way is inappropriate. The Minister of State should, therefore, consider accepting the amendments.

Pearse Doherty (Donegal South West, Sinn Fein)
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Amendment No. 17 in my name deals the prohibition being put in place to prevent voluntary assistants from becoming members of the boards of credit unions. When we discussed this matter on Committee Stage, the Minister for Finance indicated a willingness to deal with all but one of the exclusions about which my party and I are concerned. He indicated that he would bring forward proposals in respect of someone who fell into arrears for more than 90 days. He also stated he would deal with the prohibition on voluntary assistants from one credit union not serving on the board of another. Further, he indicated a willingness to deal with the position on the board oversight committee. He stated he would take action on all of these issues and indicated that he could strengthen other parts of the Bill in order to deal with conflicts of interest. I will be very interested in discovering the progress that has been made in this regard, particularly in the context of the type of wording he is considering introducing, etc. I will park these issues because we are of the view that he may deal with them.

The issue which was not dealt with in a satisfactory manner on Committee Stage was voluntary assistants being barred from serving as members of the boards of credit unions. This prohibition is going to have an effect on credit unions across the board, particularly in view of their nature and the number of volunteers who work for them. It will have a particular impact on smaller credit unions which rely on voluntary assistant to try to keep their costs low. This allows them to offer products to their members at a low cost. If we put in place a prohibition such as that suggested, not only will it undermine the democratic ethos whereby the members of credit unions are entitled to elect the members of their boards, it could also have an impact on the overall cost burden of credit unions. When a member of a board volunteers within a credit union, it allows him or her to witness, at first hand, the impact of the decisions made by the board. It also allows for a flow or exchange of information in this regard. Not only is there a cost issue, there is also a practical consideration. I reiterate that nowhere else in the world is there a prohibition on voluntary assistants in credit unions serving on their boards. Introducing such a prohibition in Ireland will bring us to a destination we do not need to visit. The parts of the Bill relating to conflicts of interest could be strengthened to deal with genuine conflicts of interest which might arise in the work of a board and that being carried out by a voluntary assistant. It is not fair to prohibit voluntary assistants from becoming members of boards. A voluntary assistant with a credit union who passionately believes in what it is doing, agrees with its ethos and wants to serve on its board could encounter difficulty in seeking election as a board member. The reason is that other members would be aware that, once elected, such an individual would be obliged to vacate his or her voluntary position with immediate effect and there might not be another person available to carry on his or her work. Volunteers are, therefore, restricted from playing a more enhanced role within credit unions.

I have not pressed any amendment to a vote thus far, particularly as we are making progress. However, this issue must be dealt with and we have not yet received an indication from the Minister that he is going to take action on it. What is proposed in the Bill is genuinely unfair on volunteers. God knows, we need more, not fewer, volunteers. Putting in place a restriction which does not apply anywhere else in the world is not the way to proceed. There are other ways in which we can deal with conflicts of interest and overseeing people's work. There are better ways to proceed than putting in place restrictions of this nature. I ask the Minister of State to be open-minded in this matter.

Michael McGrath (Cork South Central, Fianna Fail)
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We had a good discussion on this matter on Committee Stage. I share the sentiments expressed by Deputies Tommy Broughan and Pearse Doherty. The issue is that many credit unions are, to a large extent, dependent on the work of volunteers. In that context, some of the exclusions provided for in the Bill, as drafted, are overly restrictive. I welcomed the Minister for Finance's comments on Committee Stage to the effect that he was prepared to revisit these exclusions. We brought forward alternative suggestions in this regard. One was that there be a cap on the number of volunteers serving on any given board.

It is welcome that the Minister agreed to examine the exclusion relating to those in arrears for 90 days or more. It could be extremely humiliating for a person who has served a credit union well for many years and, through no fault of his or her own, run into financial difficulties to be forced to resign from the board of that credit union and disclose his or her reasons for doing so. In the context of the operation of credit unions, the principle of democracy should remain at the centre of the Bill. If the members of a credit union wish to elect a person, subject to certain restrictions - we do not object to all of the restrictions being put in place - their wishes should be supported.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The exclusions and term limits provided for in the Bill have excited a considerable amount of concern among credit union members, particularly as they strike at the heart of the credit union movement.

They are based on volunteerism and on a principle of democracy. While it is entirely reasonable that the Government and the regulatory authorities would want to ensure that no conflicts of interest arise - some of the inclusions are reasonable in this regard - but the inclusion of voluntary assistants, employees and those who might have fallen into arrears, are problematic and should be removed. I refer in particular to the voluntary assistant because such individuals are at the heart of the credit union movement. One might well argue it is precisely someone like a voluntary assistant who is willing to give his or her time to the credit union that would be wanted on the board of a credit union. It does not make sense to include that exclusion. On the matter of the term limits, the Minister's defence on Committee Stage for these limits was the need to uphold a principle of rotation, as he called it. The credit unions have indicated a willingness to look at something at local level in the credit unions that would try to vindicate that principle of renewing boards and officer positions. However, the idea of Big Brother imposing these term limits in a way that could adversely affect the functioning of the credit unions and the right of the members of credit unions to democratically decide who should be a board member or an officer of the union, strikes at the heart of the democratic basis of the credit unions. The opposition and concern expressed by the credit unions and their members on this issue is entirely understandable. I suggest the Government should consider acceding to these concerns.

Brian Hayes (Dublin South West, Fine Gael)
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We are dealing with amendments Nos. 16 to 22, inclusive. I will deal with Deputy Doherty's question about the progress on some of the commitments given by the Minister for Finance on Committee Stage. I am aware of the discussion that occurred.

Amendments Nos. 16 to 22, inclusive, relate to board membership. Amendments Nos. 16 and 17 relate to section 15(10)(a). As highlighted on Committee Stage, one of the core purposes of the Bill, as expressed in its Long Title, is to change the governance requirements for credit unions by removing certain management functions from boards of directors of credit unions, providing for a separate management structure and to improve the oversight and general policy functions of the board.

The core change at the centre of the governance provisions is to separate the role of the board in overseeing the operations of credit unions from the day-to-day operations. These exclusions are designed to ensure that individuals do not oversee their own work and are answerable to themselves as a result. Exclusions from board membership are specifically recommended in the commission report and were examined in some detail by the commission. These exclusions were agreed by the Irish League of Credit Unions. These exclusions were also discussed in great detail on Committee Stage and to which colleagues have referred.

The exclusion in this subsection only, prevents a voluntary assistant from being a director at the same time. That is, there is nothing to stop a person from being a volunteer holding a position on a board otherwise. The risks of a conflict of interest are much lower in the case of a volunteer at another credit union as such a person will have no financial or employment interest at stake. As the Minister flagged on Committee Stage, on that basis, he is considering removing voluntary assistants of other credit unions from this provision.

Amendment No. 18 would amend subsection (10)(b) to allow a person sit on a board of one credit union and also be responsible for overseeing the board of another, possibly neighbouring, credit union. The Minister stated on Committee Stage that he accepted that the Bill contains safeguards regarding conflicts of interest and that a member of a board oversight committee at one credit union could bring significant skills to bear on the board of another credit union. As I have outlined, the Minister stated he would reflect further on this case. However, the priority will be to avoid any conflict that might compromise the best interests of credit union members.

Amendment No. 19 seeks to amend subsection (10)(c),as raised on Committee Stage. If this amendment were to be accepted, it would allow a director of one credit union to also become a director of another credit union. Members need to have confidence that board members are free from conflicts of duty and also conflicts of loyalty. A director who must make decisions about business strategy or a possible amalgamation, may find it difficult to maintain sufficient objectivity where the decision might also affect the neighbouring credit union of which he or she may also be a board member. Therefore, I do not propose to accept amendment No. 19.

If accepted, amendment No. 20 would allow employees of representative groups to sit on credit union boards even where to do so could expose them to a potential conflict of interest. As stated on Committee Stage, the Minister did not propose to accept the amendment on that occasion. I note the Irish League of Credit Unions made it expressly clear when it came before the joint committee in September that it had no difficulty with this particular exclusion. It is not proposed to accept amendment No. 20.

Amendment No. 21 relates to subsection (10)(m). The amendment would allow a person who is in arrears for more than 90 consecutive days under a debt obligation to that credit union, to sit on the board. The core functions of boards of credit unions are lending, provisioning and credit control. Allowing those with a manifest arrears problem to remain on the board and to continue to make key decisions about lending and arrears in the wider credit union, creates potential for conflict of interest. However, I am sensitive to some of the concerns raised by Deputies about how this might be handled. Therefore, the Minister has undertaken to examine the issue with the Office of the Attorney General, with a view to bringing forward an amendment to allow this matter to be dealt with in the rules of the credit union. We do not propose to accept amendment No. 21.

Amendment No. 22 relates to subsection (10)(m). It would allow family members or voluntary assistants to serve on the boards of credit unions. This provision was specifically recommended by the commission to avoid conflicts of interest where the board members must undertake effective oversight of volunteers, including members of their own families. Given that the Bill also provides against conflict of interest, it will be important to retain sufficient scope to draw on a sufficiently wide pool of volunteers. On that basis and subject to further consultation with the Office of the Attorney General, I intend to bring forward an amendment on that issue. Therefore, I am not prepared to accept amendment No. 22 in its current form.

I refer to some of the issues raised on Committee Stage. The Minister gave commitments in respect of a number of these matters. I do not need to remind the House that when the Minister gives commitments he delivers on them. The difficulty is that the time schedule between now and the Bill being considered in the Seanad is quite short. The amendments will require a formal approval by the Government. We are working with the Office of the Attorney General in respect of the precise wording. The Minister has given a commitment and he reiterates he will bring forward amendments in the other House.

The benefit of that is that any amendments made to the Bill by the other House will have to come back to this one to be agreed before the legislation can be enacted. That commitment stands. The Minister's dilemma, and mine, concerns the short legislative period available, notwithstanding that this is a matter for the House. I do not attempt in any way to second-guess the decision of the House but the Minister has asked me to say his commitment stands. The amendments will be discussed in the other House. If any are accepted by the Seanad, they will be discussed and decided upon in this House. The Minister is very cognisant of the very good discussion on all these matters on Committee Stage. He will honour the commitments he made.

Tommy Broughan (Dublin North East, Labour)
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I welcome the comments of the Minister of State. He said he would examine amendment No. 16 in respect of the expertise of a volunteer from another credit union. Similar considerations apply to amendments Nos. 18, 19 and 20. The Minister of State's positive remarks on amendments Nos. 21 and 22 are quite welcome.

A number of these amendments apply to small credit unions, in particular. I refer to credit unions in which the pool of voluntary expertise may be quite small. Obviously, we want these credit unions to continue to thrive and succeed. If restrictions are too great, the volunteering aspect will be seriously damaged. I welcome the Minister of State's comments and hope there will be progress made on the Bill when it returns to this House.

Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome the reiteration of the Minister's commitment through the Minister of State. I appreciate that the Minister of State cannot accept my argument now and must consult the Minister. However, I will make my argument in any case to try to inform his approach. I appreciate that this matter must be dealt with before the end of the year.

It is not sustainable to have a board comprised solely of volunteers overseeing their own work. However, if there are but one or two volunteers on a board, it is the board that holds those volunteers to account, not the volunteers themselves. The Minister of State has indicated that he would deal with the issue of family members where conflicts of interest arise. If I were on the board of a credit union for which my wife, son or daughter worked as a volunteer, I would almost be in the same position as the one I would be in if I were to oversee my own work as a volunteer. The reason the Minister of State is accepting the point on family members is that there are sufficiently robust provisions in other areas that can be strengthened in terms of conflicts of interest.

The board oversees volunteers, and there are ways in which this can be dealt with. This happens in respect of boards of companies throughout society. I make this point because the circumstances I describe do not arise in any credit union throughout the world. They do not arise in banks but I acknowledge there are no volunteers working in banks. I ask the Minister of State to revisit this issue. If I wanted to be elected to the board of a small credit union in which it were known that my volunteering kept costs down, my election would be unlikely because there would be nobody to replace me in my voluntary position. Issues arise in this regard.

I have tabled an amendment stipulating the possibility of introducing a waiver. We will discuss this later. The best approach to volunteers is the one I have described. We are halfway there because conflict-of-interest rules exist and can be strengthened. The existing provisions make sense on paper but not in practice, particularly for small credit unions that have a small pool of staff. It would be great to have a perfect scenario in which volunteers were beating down the doors of credit unions to become involved in the movement. However, credit unions are competing with all other voluntary organisations. I appeal to the Minister of State to take some of my concerns on board.

Brian Hayes (Dublin South West, Fine Gael)
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The Deputy makes a fair point. Sometimes when we talk about credit unions, we assume they are all part of an homogenous entity. Of course, they are not. There are big and small ones and they are located in different parts of the country. When this issue was brought to my attention by a network of credit unions in my area, I could see some of the difficulties that arose. I suspect that in a large urban setting the scale of the problem is totally at variance with that in more rural parts of the country.

Everyone accepts legislation is required, and there is considerable buy-in in that regard. However, we do not want to diminish the extraordinary amount of volunteering that exists at board level and throughout the organisation. In so far as we can reflect a common sense approach in the legislation that is ultimately passed by both Houses, we will do so. We are mindful of the concerns that Deputies have raised. Although there was support for the proposal when the commission's report emerged, many smaller credit unions began to find their voice and told us all the concerns that could arise for them with regard to the full application of what is suggested. We do not want circumstances in which the very people who have been keeping the organisation going for a long time are forced to withdraw. These people are at the heart of their communities. However, one does not want circumstances in which conflicts of interest cannot be addressed from a prudential perspective. This matter can be dealt with in the context of the rules referred to by Deputy Doherty. We are going to attempt to strike the required balance. When the Bill returns from the other House, I hope the concerns raised by Deputies on Committee and Report Stages will be reflected in the final text.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Amendments Nos. 23 to 27, inclusive, are related. Amendment No. 24 is an alternative to amendment No. 23, and amendment No. 27 is an alternative to amendment No. 26. Amendments Nos. 24 and 27 are cognate, and amendments Nos. 23 to 27, inclusive, are to be discussed together.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 23:

In page 21, to delete lines 2 to 6.

The joint committee also covered the term limit provision in detail in the context of the concept of voluntarism. There is grave concern in credit unions and communities about such an exclusion. When Mr. Kieron Brennan of the Irish League of Credit Unions appeared before the joint committee to discuss the legislation, he stated:

Credit unions will not be allowed to elect whomsoever they wish to serve on their boards. In addition, it would be inequitable, unnecessary and potentially detrimental to some particularly small credit unions to impose a legal restriction on the number of years an individual can serve as a director or on the board oversight committee. Were this proposal to be implemented, the Republic of Ireland movement would be the only credit union movement worldwide where such a limitation would exist.

Terms limits for politicians have often been discussed. Tomorrow is my 20th anniversary as a Member after five elections.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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I congratulate the Deputy.

Tommy Broughan (Dublin North East, Labour)
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Thank you, a Cheann Comhairle. Term limits have been debated in the context of involving more people in the Parliament by having Members serve only a few terms, similar to the US President or US state posts, before bringing their expertise elsewhere. Generally, in the corporate world, this does not happen. Companies try to hang on to talented executive chairpersons or directors for as long as they are willing to serve, particularly in a voluntary capacity. The Irish League of Credit Unions stated this provision could be addressed through local credit union by-laws and that they could decide in their own good time how many terms a volunteer might serve. The American credit union leader also addressed the joint committee and said Ireland would be unique if it introduced such restrictions. It could be a body blow to voluntarism in small credit unions. The Minister might examine this issue again, as I tried to do in amendments Nos. 23 and 26.

Pearse Doherty (Donegal South West, Sinn Fein)
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Tomorrow is the second anniversary of my election to the House for the first time, but Deputy Tommy Broughan has served 18 more years than me.

I have tabled three amendments, two of which deal with term limits and the other with a waiver. I will not rehearse the arguments I made on Committee Stage regarding term limits, with which I do not agree. The renewal of boards is important, but democracy is also important in the credit union movement. Renewal is happening without term limits, but it is clear the Minister will impose them. Given that is the case, I seek in amendments Nos. 24 and 27 to extend the provision whereby board members can only serve nine years out of 15 to 12. I urge the Minister of State to accept them.

I tabled amendment No. 25 following the consideration of issues I raised at the joint committee. I suggested focusing on smaller credit unions. While accepting there will be term limits, the impact of having to comply with the legislation will be that some credit unions will have to prevent directors from continuing after nine years service. This will be a problem where they have a small number of people with the necessary skills from which to draw. They cannot just appoint anybody as a director. He or she must have experience and so on, as provided for in the Bill. A waiver clause must be provided for small credit unions that will be unable to fulfil the requirements of section 14.

When I raised this issue with the Minister, I was invited to table an amendment. My amendment provides that, "The requirement of this subsection may be waived by the Bank in exceptional circumstances upon application by the credit union". This would not mean credit unions could disregard the section, but if they considered it was having a detrimental impact on them or they could not comply with it, an appeals mechanism should be provided and the Registrar of Credit Unions and the Central Bank would have the final say. This is an attempt to deal with unintentional consequences of the Bill. If there are term limits, it will impose renewal on the sector, which is fine in the context of from where the Government is coming, but in imposing renewal it needs to be ensured smaller credit unions will not be detrimentally affected. The safety clause is that the Registrar of Credit Unions and the Central Bank would have the final say. Perhaps the Minister might examine the wording. I was invited to do this and this is the wording I have brought forward. It is important that this provision be included because there could be unintended consequences of term limits if it is not. If the final decision is left to the Cental Bank, there should be nothing to fear.

Michael McGrath (Cork South Central, Fianna Fail)
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I recognise the Minister's logic in encouraging rotation and a turnover at board level, but it is not necessary. What is the problem we are trying to solve? What is not happening that should happen? There is a natural turnover of directors in the vast majority of credit unions. They must all go before their members at AGMs and if their positions are renewed, it is because their members have faith in them that they are doing their job correctly. No such rotation provisions apply to the banks, for example, and directors can serve indefinitely.

Deputy Pearse Doherty's waiver amendment is positive and should be accepted by the Government because there will be cases, particularly in small rural credit unions, where they will be unable to do without directors. This provision will not kick in for any individual for 12 years following the enactment of the legislation if amendments Nos. 24 and 27 are accepted, as the Minister indicated he would. The credit unions, therefore, have plenty of time to adjust to rotation at board level, but it will present problems down the road. The issue has consistently been raised around the country. It will not necessarily be a problem in the Minister of State's area or in mine, as they are largely urban and the credit unions are of a certain scale, but it will present a problem in rural communities.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Everybody is sympathetic to the notion of renewal, bringing new people in and developing them to run credit unions.

That is a laudable aspiration. However, there is a problem in artificially imposing limits which could actually have a detrimental effect without resolving the problem, particularly in small rural areas and towns where one might not have the base of people with the necessary skills and abilities. The Government will have to reconsider this.

Initially, the Irish League of Credit Unions was agreeable to the term limits. However, when it went back to the local credit union branches and members, people were up in arms about it, expressing strong opposition and reservations about the limits. The Government should take this on board. The grassroots of the credit union movement are deeply concerned about this issue, seeing it as a threat to their ability to function and an erosion of the democratic right of credit union members to decide who they want on their boards. It is a powerful argument when it is pointed out that no such limits apply in the banking sector or, indeed, in politics where one could argue they are more required. That is not to say that one does not get cliques or stagnant leadership in a credit union and some form of dealing with these is required. However, the credit unions' proposal that there should be protocols at local level to ensure there is rotation and renewal of board members is a reasonable compromise. This will bring together the Minister's reasonable concerns with those of the members about their right to make decisions about who they want serving on boards and as officers. The Minister should consider the concerns of the grassroots of the credit union movement and bring forward a formula that allays them.

Tommy Broughan (Dublin North East, Labour)
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The arguments have been well put. Will the term limit contained in sections 14 and 15 be examined again and be left to the local organisation itself to decide if it will impose restrictions? Elsewhere in general company law, corporate governance conditions for directors have been become very strict over the past six years. This type of approach in the case of credit unions, however, has not been pursued. The provision's implications were only realised by the smaller credit unions when the Bill was finally published. I urge the Minister to look at our amendments again.

Michael Noonan (Limerick City, Fine Gael)
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Amendments Nos. 23, 24, 26 and 27 relate to term limits for board members. There was a lengthy discussion on Committee Stage on this matter. My priority is to retain the principle of board rotation. However, I am flexible on the number of years and I intend to bring forward an amendment, following consultation with the Attorney General's office, to change the term limits to 12 years in aggregate in a 15 year period. This will be done when the Bill is taken in the Seanad and it will be returned to the Dáil.

Amendment No. 25 follows on from an exchange I had with Deputy Pearse Doherty on Committee Stage relating to exceptional circumstances where the term limits might be disapplied, namely where the board would not be able to attract sufficient skills and expertise otherwise. Deputy Pearse Doherty instanced the case of small credit unions where the pool of eligible directors could be small. My Department is exploring options for this with the Attorney General's office to see what can be done to address this point. On that basis, I do not propose to accept this amendment. However, the issue is being examined closely and in a constructive way.

Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome the commitment from the Minister. I am particularly pleased he will examine the waiver issue and has agreed to extend the term limits.

Tommy Broughan (Dublin North East, Labour)
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I welcome the Minister's commitment in this regard.

Jack Wall (Kildare South, Labour)
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Amendments Nos. 31 and 51 are related and will be discussed together.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 31:

In page 34, between lines 14 and 15, to insert the following:"22.—The Principal Act is amended by substituting the following for subsections (1) and (2) of section 64:

"64.—(1) The treasurer of a credit union shall be responsible for ensuring the timely preparation of accounts and their presentation to members at general meetings.".".

Michael Noonan (Limerick City, Fine Gael)
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Amendments Nos. 31 and 51, Schedule 52, relate to the role of the treasurer under the 1997 Act which is being removed by this Bill. As I outlined on Committee Stage, this is to give effect to the commission's recommendations concerning the separation of the governance and the executive functions in credit unions.

The governance requirements recommended by the commission set out the roles and responsibilities of two key positions within the credit union, those of chair of the board and the manager of the credit union. Under existing legislation the treasurer is identified as the managing director of the credit union and his or her responsibilities include executive responsibilities such as submitting financial statements to the board. To ensure the roles and responsibilities of the board and management do not overlap and that board members have governance rather than executive responsibilities the commission recommended that the 1997 Act be amended to remove the role of treasurer and assign executive responsibilities to the management of the credit union. On Committee Stage I indicated that I would consider an amendment to allow one of the directors to assume responsibility for presenting the accounts of the credit union at the annual general meeting. This role was previously fulfilled by the treasurer. Currently, my officials are working with the Office of the Attorney General on drafting an amendment to this effect and on that basis I do not propose to accept amendments Nos. 31 and 51.

Tommy Broughan (Dublin North East, Labour)
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I welcome what the Minister has said because he is moving towards an accommodation with representations that have been made to him as well as the representations made at the Select Sub-Committee on Finance. That is useful and on that basis I withdraw the amendment.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I move amendment No. 32:

In page 35, line 10, after “committee” to insert the following:

“as expressed through a written statement issued to the director in question”.

The amendment relates to section 23 which states "the board oversight committee of a credit union considers that a member of the board of directors has taken any action or decision which, in the opinion of the committee, is not in accordance with the requirements of this Part...". This relates to where there is a suspension or where disciplinary action is taken against a member of the board. This was requested of me by someone who was previously on a board and who had certain issues with how this disciplinary procedure operated. The amendment calls for any opinion, in cases where the oversight committee believes that disciplinary action is required or where someone has not acted in accordance with this part of the Bill, to be a written opinion in order that there is a clear record and transparency, accountability and recourse for the person in question. It seems a small but important and perfectly reasonable amendment and the Minister indicated on Committee Stage that he believed it had merit. I hope the Minister still believes this and that he intends to bring forward his own amendment which will take this concern on board.

Michael Noonan (Limerick City, Fine Gael)
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As Deputy Boyd Barrett stated, this amendment was discussed on Committee Stage. At that stage I indicated that I accepted the principle behind the amendment. This would require the board oversight committee to provide its opinion in writing regarding any action or decision of a director which it considered to be in conflict with the relevant part of the Act. My officials are discussing this with the Attorney General's office with a view to an amendment being brought forward to this effect.

Jack Wall (Kildare South, Labour)
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Amendments Nos. 34 to 39, inclusive, are related and may be discussed together.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 34:

In page 52, to delete lines 35 to 38 and substitute the following:

“(a) an employee of the credit union;”.

Michael Noonan (Limerick City, Fine Gael)
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Amendments Nos. 34 to 39, inclusive, relate to membership of the board oversight committee. The amendments raise similar considerations to those discussed on board exclusions dealt with by amendments Nos. 16 to 22, inclusive. As I stated on Committee Stage, I intend to ensure consistency in the approaches to exclusions in resect of membership of the board of directors and membership of the board oversight committee. Therefore, I intend to bring forward similar amendments to those outlined by the Minister of State, Deputy Hayes, earlier in respect of section 15.

Jack Wall (Kildare South, Labour)
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Amendments Nos. 40 to 42, inclusive, are related and will be discussed together. Amendment No. 41 is alternate to amendment No. 40.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 40:

In page 53, to delete lines 47 to 50 and in page 54, to delete lines 1 and 2.

Pearse Doherty (Donegal South West, Sinn Fein)
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I have two amendments in this group but we have discussed the issue already. The Minister has indicated a proposal to extend the limit to 12 years. I presume that will extend to this section as well.

Michael Noonan (Limerick City, Fine Gael)
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Amendments Nos. 40 to 42, inclusive, relate to term limits for board members and I will deal with them together. There was a lengthy discussion on Committee Stage on boards of directors and term limits. My priority is to retain the principle of rotation which is at the core of this measure and in line with the commission recommendations. I have stated that I intend to bring forward an amendment following consultation with the Attorney General's office to change the term limits to 12 years on aggregate in a 15 year period.

Amendment No. 42 follows from an exchange with Deputy Doherty on Committee Stage relating to exceptional circumstances where the term limits might be dis-applied, in particular, where the board is unable to attract sufficient skills and expertise otherwise. My Department is currently exploring options for this with the Attorney General's office with a view to seeing what can be done to address this point. On that basis I do not propose to accept the amendments at this stage. However, I assure the Deputy that the issue is being examined closely and in a constructive way.

Jack Wall (Kildare South, Labour)
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Amendments Nos. 45 and 46 are related and will be discussed together by agreement.

Pearse Doherty (Donegal South West, Sinn Fein)
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I move amendment No. 45:

In page 59, between lines 20 and 21, to insert the following:

"30.—The Principal Act is amended by the insertion of the following new section after section 84A (inserted by the Credit Union Act 2012):

"84B.—As soon as is practicable, the Bank shall enter into a memorandum of understanding with credit unions the form of which shall be agreed in consultation with credit unions and representative bodies.".".

There was confusion on Committee Stage about my proposal regarding a memorandum of understanding and the existing consultation protocol for credit unions. Credit unions believe there is a need for a memorandum of understanding which would resemble a customer charter. The purpose of the memorandum of understanding is to ensure the Central Bank and the credit unions are clear about what is required of them under the new regulatory regime. I am sure the Minister is well aware of the many instances of lending restrictions being imposed on credit unions by the Central Bank without any real explanation in this regard or, more important, without any guidance as to how they could remedy the situation.

Some credit unions, while not happy about it, recognise that restrictions in some circumstances are needed. When in place, they are happy to comply with them. However, credit unions want clarity on what they have to do for these restrictions to be eased or lifted. More recently, credit unions have had onerous requirements imposed on them at one of their busiest times, namely, during preparation for their AGMs. We all know that the timeframe in respect of the AGM process is very strict in that members must be notified at least 21 days in advance of all of the different arrangements that must be in place to facilitate the AGM. In several cases, the Central Bank has instructed credit unions to carry out a full asset review of loans, investments and fixed assets in the middle of the AGM process. This has caused the delay of some AGMs. Given that the credit union movement is a voluntary and democratic organisation, the knock-on effect of this in terms of member confidence is not good, in particular given that the asset review could have been undertaken during June or July. There was no reason it needed to be undertaken during the middle of the AGM process. This may be due to a lack of understanding of how the movement works and the importance of this element of it.

The memorandum of understanding should set out reasonable timeframes for future dealings with the Central Bank and the credit unions. It is important to say that the memorandum of understanding is not only about what the Central Bank is doing rather it is about making clear the responsibilities of credit unions under the new regulatory regime. The detail of the memorandum of understanding will, as provided for in the amendment, be worked out by the implementation group which consists of representatives of the Central Bank and credit union movement. Placing the production of a memorandum of understanding on a statutory footing is, in my view, the only way to ensure this will happen. I strongly urge the Minister to accept amendment No. 45.

Let us consider what problem could arise as a result of the Minister accepting this amendment. I have read the consultation document. It is a different animal to a memorandum of understanding. It outlines how the Central Bank will consult with the credit union movement when introducing regulations. Ireland is currently party to a memorandum of understanding with the troika. As such, the Minister knows well what it means, namely, it is a clear understanding between two parties of what is expected of them. Obviously that detail should not be put on a statutory footing but there should be a requirement to put in place a memorandum of understanding.

I referred earlier to situations wherein suspicion could arise. I have given incidents of where the Central Bank has not been clear as to why it has imposed limits on credit unions or what they need to do in such situation. I also referred earlier to the Central Bank forcing credit unions to undertake asset reviews during the AGM process. There needs to be a clear understanding of what is expected of both parties. In my view, a memorandum of understanding can only enhance the process. It fits well with the commission report on credit unions and with the Credit Union Bill 2012. All sides can only benefit from a formal memorandum of understanding, which will ensure a greater understanding of what is expected of them. This should be complemented by the consultation protocol currently in place.

Tommy Broughan (Dublin North East, Labour)
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I support the comments made by Deputy Doherty. It would be a valuable asset to the credit union movement if such a clear memorandum of understanding were provided for in this legislation. Such memorandums of understanding would be agreed in consultation with the credit unions, representative bodies and the banks.

We are moving into a markedly different regulatory environment with new onerous obligations on credit unions. It is critical that this communication channel between the credit unions, representatives bodies and the bank would be clear, with no possibility of misunderstanding. The concern remains that misunderstandings may arise in the future if written instructions are sent to the credit unions from the Central Bank through their representative bodies and the unions, which abruptly introduce new regulatory conditions. The provision of a general channel of communication, namely, the memorandum of understanding, would be of assistance.

I agree with Deputy Doherty that the Minister is knowledgeable about memorandums of understanding given he is party to one, on behalf of the country, with the troika. We are now heading into our third horrendous year of that memorandum of understanding. The Minister will, therefore, at least understand the reason it is important it is clearly written down in a memorandum of understanding exactly what is required of both parties. This request from the credit union movement is a reasonable one. Also, I believe the Bill should make provision for the regulatory impact analysis to which I referred in my opening contribution on Report Stage. The changes that are coming in terms of new structures, officerships and costs for the credit union movement generally, must be explored by the Central Bank in close consultation with credit unions so that there can be no misunderstanding or belief that it is a one-way channel of diktats from the Central Bank to the smallest financial institutions in the State.

I ask that the Minister give serious consideration to adopting amendment No. 46 and tabling it for for debate in the Seanad, following which we can discuss it further when the Bill comes back to this House.

Michael Noonan (Limerick City, Fine Gael)
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These amendments provide for a memorandum of understanding between the Central Bank and credit unions. The commission recommended that a consultation protocol should be in place between the Central Bank and credit unions. Since we last discussed this issue on Committee Stage, that protocol has been developed, following consultation between the Central Bank, the Minister, the credit unions, representative bodies and the credit union advisory committee. The protocol was sent to all credit unions earlier this week. I have asked that it be placed in the Oireachtas Library and advise Deputies to have a look at it.

The protocol sets out how the Central Bank proposes to engage with credit unions in any formal consultative process prior to the introduction of the new regulations. The protocol states that the bank is committed to having clear, open and transparent engagement with stakeholders and fulfilling its financial regulation and supervisory objectives. The bank commits to engage formally and informally with credit unions, representative bodies and relevant stakeholders and to ensuring it complies with any relevant legal obligations relating to consultation.

The bank will consult on new regulations that will have a significant impact on the business of credit unions. As part of the consultative process, it will invite credit unions, their representative bodies and other relevant stakeholders to make written submissions which will be reviewed and considered before regulations are made.

It has been suggested a broader memorandum of understanding should be agreed between the Central Bank and credit unions. I understand one of the concerns driving this suggestion is that the Central Bank should issue written directions, but the Bill already provides for this, as well as for an appeals mechanism. I do not favour having a statutory memorandum of understanding, nor was one recommended by the commission. We should be careful not to undermine the independence of the regulator. We have learned enough from the financial crisis to know that the Central Bank must be able to act within its powers, when required. Therefore, I do not propose to accept amendments Nos. 45 and 46. The protocol has now been published and is available in the Oireachtas Library and I refer Deputies to it because it is comprehensive.

Pearse Doherty (Donegal South West, Sinn Fein)
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I have read the consultation protocol for credit unions and it does not do what I am or the Irish League of Credit Unions is asking for. I note the Minister's point that he does not want to have a statutory memorandum of understanding, but I again reiterate the point that the memorandum would not be on a statutory footing. The only thing that would be on a statutory footing is the requirement to have one. If the Minister is not willing to include it in the legislation, would he be willing to ask both parties to enter into a formal memorandum of understanding? This is not a one way street, but there is nothing in the communication protocol that actually places a requirement on the credit union sector. It only deals with how the Central Bank will consult the sector on new regulations. There is nothing in it that places a requirement on the credit union movement to understand how it will fulfil its side of the bargain in terms of the new regulatory regime. That is important because, as we know, a memorandum of understanding is a two way street and iabout having a better understanding of what is expected.

I take on board the Minister's point that there must be flexibility and that the Central Bank cannot have its hands tied. He seems to see a memorandum of understanding as somehow limiting the ability or power of the bank to intervene when it needs to and as being restrictive. The important point is that the bank will have to agree to the memorandum of understanding and scope can be provided within it to allow the bank to deviate from its provisions in certain circumstances. The key point about a memorandum of understanding is that it does what it says on the tin, namely, it allows the parties to understand each other. It is about making sure there is a clear understanding of what is required of both parties.

The credit unions will have their own view on the consultation protocol which was developed by the Central Bank and issued to them. The document in the Oireachtas Library is the second draft, but it does not represent the type of understanding about which I am talking. It could sit alongside such a memorandum because it would deal with how the bank would consult credit unions. If the Minister is not willing to accept the amendment and a statutory requirement to have a memorandum of understanding, I ask that, in the interests of better understanding between the two parties, he ensure there is an attempt by both sides to reach a formal memorandum of understanding in order that they would know how the regulatory regime would apply to them and what was expected of them.

Tommy Broughan (Dublin North East, Labour)
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I share Deputy Pearse Doherty's views. Obviously, the protocol is welcome, but we are talking about two-way communication and having a formal memorandum of understanding would seem to be the best way to advance this. In the context of major new Central Bank legislation that will be brought before the House, is this approach something the Minister would consider vis-à-vis financial institutions generally, given the catastrophic failure of the Central Bank to regulate the financial sector up to 2009? I know we will be faced with new banking supervisory rules at some stage next year and perhaps memorandums of understanding could be incorporated into them. Alternatively, the Minister might review the position when the Bill goes before the Seanad and give further consideration to the memorandum of understanding proposal.

Michael Noonan (Limerick City, Fine Gael)
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There is material in the protocol which comes close enough to the position espoused by Deputy Pearse Doherty. He will recall that the commission's report recommends a regulatory impact analysis when the Central Bank is introducing new regulations and the consultation protocol confirms that the bank will do this. When it promulgates regulations, an impact analysis will be carried out. This is something the credit union movement will welcome. The bank also intends to issue a prudential rule book which will make it clear to credit unions what is expected of them and, again, there will be consultation on it. While it is not on a statutory basis, there will be an interchange of opinion, when both sides will know what is expected of them. It will then be detailed in a rule book, after completion of the regulatory analysis. We are there on a non-statutory basis and I am not of a mind to move to a statutory basis.

Pearse Doherty (Donegal South West, Sinn Fein)
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I have heard the Minister say a number of times that he is not willing to move to a statutory basis and at this late stage in dealing with the Bill I am not going to push that issue. I acknowledge that section 7 of the consultation protocol deals with the regulatory impact assessment, which is to be welcomed as it will look at options and the implications in terms of regulation of the credit union movement. A prudential rule book will also go some way towards clarifying what is required of the movement. A regulatory impact assessment is one element, but there are others that should or could be included in a broader memorandum of understanding. I return to my point about this being a two-way street.

I do not understand the Minister's reluctance. I understand his fear that it might tie the hands of the Central Bank and agree that is something we should not do. However, a memorandum of understanding could be developed between both parties that would provide a clear understanding of the requirements on both in terms of the new regulatory regime. Part of this is included in the communication protocol in terms of how communication on the part of the Central Bank will happen, but how communication on the part of credit unions will happen has not been spelled out. There are other elements that are missing too.

I will park the statutory requirement issue and again appeal to the Minister to request the two parties, in the context of the rule book and communication protocol, to attempt to formulate a memorandum of understanding. If the Central Bank is not happy with it, obviously, there will be no memorandum of understanding. I am acknowledging that it would not be on a statutory footing. However, an attempt should be made because memorandums of understanding give clarity in terms of what is expected. I will not split hairs over this, but the provision would fit well with the Bill and the report of the commission. The intention is that there would be a better understanding between the credit union movement and the Central Bank and vice versa. I, therefore, ask the Minister to ask them to see if they could reach agreement on a formal memorandum of understanding that would not be on a statutory basis.

Michael Noonan (Limerick City, Fine Gael)
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I will ask my officials to engage in consultations along the lines suggested by the Deputy. Seeing as the next step is to be taken in the Seanad, would it be okay if I wrote to the Deputy on this matter?

Pearse Doherty (Donegal South West, Sinn Fein)
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That would be fine. It would be appreciated.

Tommy Broughan (Dublin North East, Labour)
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I move amendment No. 46:

In page 62, between lines 39 and 40, to insert the following:"185.-As soon as is practicable, the Bank shall enter into a memorandum of understanding with credit unions the form of which shall be agreed in consultation with credit unions and representatives bodies.".".

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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I move amendment No. 47:

In page 63, between lines 15 and 16, to insert the following:38.-The Credit Union Act 1997 (Exemption from Additional Services Requirements) Regulations 2004 (S.I. No. 223/2004) (as amended by the Credit Union Act 1997 (Exemption from Additional Services Requirements) (Amendment) Regulations 2007 (S.I. No. 838/2007)) is amended by the substitution of the following for paragraph 3 of the Schedule:

"3. Debit cards and automated teller machine services (ATMs):

(a) that is to say a service which enables a credit union member to debit their credit union account by use of a debit card or to withdraw funds from his or her credit union account by means of a single credit union branded debit card/ATM card,

(b) conditions to be fulfilled-

(i) terms and conditions of use of such a card(s) must be agreed by the credit union and the member,

(ii) the member must complete the relevant registration form prior to the issue of the card(s).".".

This Bill will strengthen credit unions, which augurs well for the future of the movement. If the credit union movement is to be successful into the future, however, it will need full engagement by the Central Bank. The Bill will encourage credit unions to progress to the next stage of their development while at the same time taking cognisance of their special place in society, their mutual nature and their strong voluntary ethos. If credit unions embrace this legislation and the Central Banks improves the delivery of services, we can look forward to a sustainable, volunteer-led credit union sector that meets the needs of the community.

As a former credit union manager, I am a strong advocate of the ethical banking values upheld by credit unions which put their members before profit or personal gain. I want to see credit unions continuing to serve communities in cities, towns and villages. This Bill, together with the €250 million being set aside this year and the commitment that a further €250 million will be forthcoming, ensures credit unions will have an enhanced role to play in providing financial services.

Michael Noonan (Limerick City, Fine Gael)
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The amendment would exempt debit cards from the additional services requirements set out under section 48 of the Credit Union Act 1997. Under the Bill the Central Bank will be able to exempt certain services from the additional service requirements set out under section 48, subject to certain requirements. To streamline procedures, the Bill provides that decisions to provide new services can be taken by a board of directors rather than decided at a general meeting of members. On the specific recommendation of the commission, it also facilitates greater use of debit cards by dealing with the issue of withdrawals and attached shares.

The commission did not consider it appropriate to specify which services credit unions ought to provide but recommended that a new regime for the provision of additional services should be developed within the context of the tiered regulatory approach set out in its report. Credit unions in tier one would be able to provide certain exempted additional services, while tiers two and three would be able to offer a wider range of services.

On that basis, I do not propose to accept the amendment at this stage but I will give the matter further consideration. In general terms, it is my view that the Bill enables credit unions to exercise various options to provide debit cards without requiring further amendment.