Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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I thank the Ceann Comhairle for having accepted this particularly important Topical Issue matter. I also thank the Minister of State, Deputy Harris, for coming in to deal with it. I hope he will take seriously the issues I am raising.

The Minister of State will know from his party colleagues the huge controversy that has surrounded the closure of Newbridge Credit Union, both locally and nationally. Locally it was a union of enormous significance. Its building dominated the local streetscape in very much the same way that it dominated the local community. The size of the building reflected the importance of that organisation to the community as a whole and its loss has had a devastating impact on the community at large and in particular on low-income families.

The impact on low-income families has been further exacerbated by the contemporaneous closure of the local parish savings club on foot of legal advice arising out of the role of the charities regulator. As a result, Newbridge has become a playground for moneylenders and the least well off in the community are suffering most. Those are the difficulties we have to contend with.

The particular issue I wish to raise is death benefit or life assurance. One of the significant benefits that came to members of credit unions and a benefit that was of particular importance to people of relatively modest means was that on death they could avail of a benefit of up to €12,000 or €12,500.

The understanding was that when the credit union transferred to Permanent TSB, all of the loans, deposits and benefits accruing to members would also transfer. It was only realised in recent months that Permanent TSB will not provide death benefits. This is important to all members but it is particularly significant to people on modest means and older people for whom this was their only life assurance provision. It provided a fund that would bury them when their time came. People were alarmed to discover that Permanent TSB will not be honouring the commitments made by the credit union.

The State has committed €53 million to fund the transition of the credit union to its new manifestation. Given the amount that has been paid to Permanent TSB and the costs incurred in the process, some of which were questionable in terms of the role played by the Central Bank and the Department of Finance, there is a moral imperative to ensure that people who had this benefit in the past can continue to enjoy it in future.

Simon Harris (Wicklow, Fine Gael)
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I thank the Deputy for raising this matter and giving me an opportunity to provide information to him and his constituents. The Central Bank received approval from the High Court under the Central Bank and Credit Institutions (Resolution) Act 2011 to transfer the assets and liabilities of Newbridge Credit Union, excluding the premises, to Permanent TSB. This action was necessary to safeguard members' savings as the only alternative available to the Central Bank was liquidation, which would have meant the loss of unprotected savings of €11 million. These included the savings of charities, schools and individuals.

On foot of a request from the Governor of the Central Bank, the Minister for Finance agreed to pay Permanent TSB a financial incentive of up to €53.9 million to support the transfer. This consisted of €23 million in cash up-front, €4.25 million for restructuring and integration costs, €2 million for other transferring liabilities and a maximum of €24.7 million to cover additional costs resulting from all loans being written off with nothing recovered. A 50:50 risk sharing agreement is in place whereby the resolution fund will absorb 50% of losses on loans performing below their transfer value and share 50% of gains on loans performing above their transfer value. The financial incentive provided in the Newbridge case is fully recoupable from the financial services sector over time in the form of a levy.

The strategic approach taken by Permanent TSB to the former Newbridge Credit Union, including the provision of any insurance coverage for customers, is a commercial matter for that entity. The Minister for Finance was informed by the Central Bank that Permanent TSB wrote to the former members of Newbridge Credit Union in December 2014 to state its intention to fully integrate the business of the credit union into the local branch of Permanent TSB. This correspondence included details of Permanent TSB's approach to life insurance on deposits and loan protection insurance, which was a commercial decision taken by Permanent TSB. All questions regarding those assets and liabilities, as well as queries on ongoing customer products and services, can and should be addressed to Permanent TSB in the first instance.

The Minister for Finance emphasises the Government's recognition of the important role of credit unions as a volunteer co-operative movement and the distinction between credit unions and other types of financial institutions. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall. In February 2015 the Central Bank approved the extension of the common bond of Naas Credit Union to incorporate a number of other areas including Newbridge. This will ensure that credit union services are again available to people in the Newbridge area. The Government is determined to support a strengthened and growing credit union movement and we encourage the movement to work with stronger credit unions so they can provide a viable option for assisting weaker credit unions. Each and every action taken by this Government on the recommendation of the Central Bank was aimed at protecting members' savings, including charities, schools and local savers in the Newbridge area.

Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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I support the objective of protecting savings but the issue of death benefit or insurance is a different matter. The Minister of State revealed that responsibility for this has been passed to Permanent TSB but agents of the State entered into an agreement with that bank before the credit union had been subsumed. The issue of death benefit should have been considered as part of this agreement. A considerable number of people are suffering because a benefit they expected to receive after being members of the credit union for several decades will now be denied to them. That is wrong and the Department of Finance should rectify the matter immediately. An information note circulated to people in advance of the credit union being subsumed stated that the legal agreements underpinning existing loan and other arrangements would not be altered by the transfer because Permanent TSB was simply going to assume the same rights and responsibilities formerly belonging to the credit union. That was people's understanding until December 2014, when the process was at an advanced stage. It is not too late to revisit this issue and do the honourable thing on behalf of the longstanding members of the credit union who expected to be able to rely on this death benefit.

Simon Harris (Wicklow, Fine Gael)
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I will bring the Deputy's views to the attention of the Minister for Finance. I am sure the Deputy did not intend this but I reject any criticism of Department of Finance officials or the Minister in respect of this matter. Every action taken was on the basis of protecting members' savings. I am sure the Deputy accepts the bona fides of the Department and the Government in that regard.

Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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I do.

Simon Harris (Wicklow, Fine Gael)
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The other option was liquidation, which would have been more expensive and, more important, would have put savings at risk. The Minister for Finance, on the recommendation of the Central Bank, has put in place funds and measures to address the problems in Newbridge. The Deputy and other colleagues from that area have outlined to me the difficulties this has caused. I am pleased that the Central Bank has made a decision that will ensure credit union services can continue to be available.

As Minister of State with responsibility for the OPW, I am exploring how we can provide Intreo services from the former credit union building, as well also other opportunities to allow the community to benefit from the space provided. I look forward to working with local representatives and community groups in that regard.