Paul Connaughton (Galway East, Fine Gael)
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7. To ask the Minister for Finance if consideration has been given to the proposed mergers between post offices and credit unions as an alternative to mainstream banking; the measures needed to make this happen; and if he will make a statement on the matter. [37053/14]

Paul Connaughton (Galway East, Fine Gael)
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The Minister is aware of the talk in his county, Limerick, of mergers between credit unions and post offices offering a different range of financial services. The question is what consideration the Department has given to the merger and what the Department can do to help roll out the idea. Many of the mainstream banks have closed some of their branches. With the mainstream banks having closed branches, the question concerns rural communities that are left with no banking service. Within the communities, a number of credit unions are looking to work with An Post to offer a different range of services. Quite a number of regulations apply. I am interested in the Minister's opinion and the opinion of the Department on future progress of the mergers.

Michael Noonan (Limerick City, Fine Gael)
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The credit union sector nationally plays an important role in providing financial services, but in doing so retains responsibility to ensure members' funds are not put at undue risk. While the Department receives many proposals on various issues, my Department recently received a proposal involving a group of six Limerick credit unions and An Post investigating potential business opportunities to co-operate with each other and I assume this is what the Deputy is referring to. The Department received this proposal on 12 August 2014, which outlines the promoters' plan to establish and operate joint initiatives between participating Limerick credit unions and An Post, on a pilot project basis.

The proposal looks at channelling some of An Post services through credit unions and also looks at the prospect of An Post providing some credit union services. I am always open to considering proposals in relation to credit unions that would see the development of the credit union business model and an increase in income for the sector. Having read this proposal, there may be some merit in it. However, it must be stressed that the proposal is at a very early stage of development and would require additional work, as identified by the proposers, before it could be considered further. 

While officials from my Department met one of the proposers of this plan to discuss its merits, such a proposal would require more development before it can be fully evaluated. The Registrar of Credit Unions at the Central Bank is responsible for the regulation of credit unions and as such, any proposal on credit unions would be subject to regulatory approval by the regulator.

Paul Connaughton (Galway East, Fine Gael)
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I understand it is at an early stage in the process and a number of credit unions in County Galway have approached me. There is an issue with rural post offices and both bodies are looking to amalgamate and to provide different services to people in areas where the main banks have gone. Even though the discussion on setting this up is in its infancy, what does the Department of Finance or the Central Bank have to do to make such a proposal workable? Must something be changed within the Department of Finance, given that credit unions can only lend to members? Will legislation be required to allow them to go outside of that and to bring in more people? Without attracting new customers, the credit union cannot survive. The main banks have left many of these rural communities. What needs to happen to increase the chances of it happening in the near future?

Michael Noonan (Limerick City, Fine Gael)
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To give a flavour of the proposal, the suggestion is that participating credit unions will be provided with post point terminals by An Post that will deliver a number of services, including Bill payment, mobile phone top-ups, one4all gift cards, refuse charges, electronic funds transfer payments, television licences, parking and toll top-ups, stamps and the local property tax. The credit union would earn various rates of commission depending on the services provided. For lodgments, each participating credit union can issue customers who wish to use the service with the lodgment card allowing them to lodge money into a post office nationwide. The money will, in turn, be lodged to the appropriate credit union account. There is a suggestion of developing a micro-loan product that will be processed between the post offices and the banks.

It is an interesting proposal and it will develop further through interaction with my Department. We must keep the Central Bank fully informed about this because, in the final analysis, the credit union division in the Central Bank is the regulator of the credit unions. We must communicate with the parent Department of An Post to ensure everything is lined up. It is an interesting proposal and, in principle, we would like to advance it further. It is at an early stage and was only introduced on 14 August. If something similar could be done in Galway, I can provide the Deputy with the data.