Dáil debates
Wednesday, 2 December 2020
Saincheisteanna Tráthúla - Topical Issue Debate
Credit Unions
4:25 pm
Jackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister of State, Deputy Fleming, for taking this Topical Issue. I received a reply from him in the past hour. This week, my office has been inundated with phone calls regarding credit unions and the regulations governing them. Several credit unions across the country need to hold annual general meetings in order to pay out dividends and interest rebates to their members. The members of those credit unions have included the payments in their Christmas budgets. They know that credit unions charge a fractionally higher interest rate but that at the end of the year there will be a rebate. That rebate is very important to the members.
Clonmel Credit Union in my constituency of Tipperary is one such institution. It has a large membership and is a very strong credit union. Councillors Siobhán Ambrose and Micheál Anglim brought this issue to my attention this week. Clonmel Credit Union has performed exceptionally well even in this difficult year. It is in a position to pay out some €1.8 million in dividends and tax rebates to its members. That is a sizeable sum of money, particularly at the time of year when families and individuals need it most. It has been an exceptionally challenging year. Members were relying on this money to pay bills, buy grocery shopping for Christmas and cover the other additional costs of Christmas. The credit union traditionally pays out the money in the first week of December. As a result of certain regulations and rules preventing credit unions from holding virtual AGMs, this much-needed payout is being prevented.
The credit union needs to approve these dividends and interest rebates at the AGM or they cannot go ahead. I am aware that other organisations, including a farming organisation with 20,000 members, are holding their AGMs on Zoom. It is hard to understand why there are not regulations in place to enable credit unions to hold a virtual AGM.
I wrote to the Minister of State about this issue yesterday and, in fairness, I have received a reply from him. I ask that he and his Department intervene to ensure, as quickly as possible, that regulations are amended to allow virtual AGMs for credit unions to go ahead. We knew that the level 5 Covid restrictions would cause issues in this regard. I see from his reply that the Minister of State is working on the issue. Is there any way, in the three weeks before Christmas, to give an amnesty to credit unions to allow them to hold their AGMs? The amending legislation has gone through the Seanad and there is a very short timeframe to get it passed in this House. Getting this money in January or February will not have the same beneficial effect for credit union members. Traditionally, they knew this cheque would be coming through the letter boxes after the first weekend in December and they could use it to cater for Santa Claus or whatever else. Members knew the money was coming. I have had numerous telephone calls from people expressing huge disappointment that it will not be coming this year.
This issue will affect members of other credit unions. In the case of Thurles credit union, for example, its AGM is also delayed. It does not have the same steadfast tradition as Clonmel in this regard but it would normally pay a dividend to members. Clonmel has a tradition down through the years, as I said, where it always pays a very significant dividend to members. It has a huge membership and the addition of €1.8 million into a provincial town in this particular year is not be dismissed lightly. I know the Minister is working on the legislation but is there any possibility of allowing virtual AGMs to go ahead before Christmas to enable credit union members to avail of dividends and rebates?
4:35 pm
Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank Deputy Cahill for raising this issue relating to Clonmel credit union. He has been in contact with me about it on a couple of occasions in recent days. Normally, in the run-up to Christmas, as the Deputy outlined, the credit union would have paid out an interest rebate or dividend, having had its AGM and having received authorisation to make those payments.
The Government recognises the important role credit unions play in Irish society as volunteer co-operative financial institutions. In the current environment, credit unions are appropriately focusing on the health and well-being of their volunteers and staff and continuing to serve the needs of their members. Credit unions are important at both a local and national level, given their community presence across the country.
It is important to note that virtual AGMs are not prohibited by Central Bank regulations. Rather, they are not allowed under the Credit Union Act 1997, which sets out that there should be an AGM which members can physically attend. That is the issue we are having to deal with now. It is for this reason that the Government brought forward the Finance (Miscellaneous Provisions) Bill 2020 to allow, among other matters, for the holding of virtual AGMs by credit unions. The Government approved the drafting of the Bill based on the general scheme on 6 October and, once the drafting phase was complete, the Bill was published on 18 November. It passed all Stages in the Seanad last week and I thank Senators for their co-operation in that regard. It will be introduced to the Dáil next week, subject to the schedule of the House. The Bill is priority legislation for the Government to get enacted before Christmas and we look forward to the co-operation of Deputies to ensure that happens. I am confident that it will happen. Once enacted, the legislation will take immediate effect and credit unions will be able to hold virtual AGMs from that point. The legislation also provides for an interim period which extends the deadline for credit unions completing end-September 2020 AGMs until 30 April 2021.
The principal reason the AGMs are not happening is that the Covid restrictions mean it is not possible to have an indoors gathering for a large AGM such as that of a credit union might be. It is an issue that has arisen solely because of Covid. Given that we do not know when the restrictions will end or the format of those restrictions as we head into the new year, we decided to bring the legislation forward to allow credit unions, if they so wish, to have virtual AGMs from January. It will take time for the boards of directors to set a date for an AGM and put the arrangements in place for a virtual meeting. It is envisaged that the meetings will not require participants to use a laptop. People can take part by telephoning in, for example, or by way of other technology and, depending on Covid restrictions, a blended meeting may be possible. Some people may be able to physically attend while others will participate by telephone or other electronic means. It is a function of the AGM, when it happens, to approve the payment of a dividend or rebate of interest.
Covid has been the particular problem in terms of the delays that have arisen up to now. I hope the directors of the credit unions know that we expect the legislation to be enacted well before Christmas. As such, they should commence arrangements to set a date for their virtual AGM as early as they can manage in the new year. I encourage Clonmel credit union and others to start moving on their initial preparations. Once the legislation is passed, they will be able to set a date promptly for their AGM.
Jackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister of State for his comprehensive reply. We all accept that we are in an unprecedented year, but it is a pity that we have got to this impasse. Unfortunately, from what the Minister of State is saying, the credit union members and their families will be the losers and the money they had planned and budgeted for will not be available to them.
Is there any possibility that a statutory instrument could be used to allow the AGMs to go ahead virtually? I accept that the Minister of State has got the legislation through the Seanad in very good time and he will get it through the Dáil as quickly as he can. However, that will not allow the AGMs to take place before Christmas. Can he introduce a statutory instrument, as he is progressing the legislation, to allow the AGMs to proceed? It is deeply disappointing for people in Clonmel not to receive these payments. I am making the case strongly for Clonmel but, as I said, credit unions in other towns will be experiencing the same difficulty. Is there any way to get around this impasse? I fully accept the Minister of State's bona fides in this matter and I acknowledge his efforts in progressing the legislation. In terms of legislative parameters, he has worked extremely quickly. However, the fact remains that, as things stand, this money will not be in circulation before Christmas. A statutory instrument might allow the AGMs to take place and the dividends and rebates to be put in people's pockets and in circulation to cover Christmas expenses.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Deputy for his remarks. As I outlined in my response, the prohibition on a virtual AGM is set out in the Credit Union Act 1997. It is not possible to change primary legislation by way of a statutory instrument. Much as I might like to be able to say otherwise, it is important to be clear and not to build up any false hopes that this could be an option. Statutory instruments are secondary legislation and one could only be brought into effect if the Act in question made specific provision for that.
The Deputy mentioned that other voluntary organisations are holding virtual AGMs in the coming days. I am a member of the GAA and I am aware that local GAA clubs are doing the same. The difference in this case is that credit unions are covered by legislation and cannot make their own local arrangements. Other voluntary organisations that are not so governed by legislation have the flexibility to make their own rules at local level without restraint of legislative provision.
Due to the vast sums that people invest in, and borrow from, credit unions, it is necessary in a democracy to have legislation in place to protect depositors, the credit unions and the communities they serve. They cannot be set aside by a Minister signing a statutory instrument.
I urge the credit unions involved to engage immediately with the Central Bank to get approval, if it is required, for the payment of a small dividend or a refund of interest, so they can have arrangements in place as urgently as possible. However, in practice, that will be early in the new year. I hope their members will understand. Their hands are tied because of the Covid situation and they cannot hold the AGMs at this point. We will do everything that we can as early as possible, but it will take another couple of weeks.