Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Parlon. I particularly welcome this Bill. I have much pleasure in supporting it, and I commend my colleague, Senator O'Toole, on the work he has done in preparing it for and bringing it before the House. It is unusual for a Senator to do this. Not many Bills have come through from the floor of the House, and he deserves commendation.

No doubt there is a need for legislation. Whether it is this legislation is open to debate. Senator O'Toole has spoken of the investment risks involved. At some time or other, there will be a failure in an organisation involved in trade, commerce, banking or credit unions. It is quite likely there will be a problem and we want to protect ourselves from that problem occurring in the case of credit unions, and the ILCU recognises that. In fact, it states that section 46 of the Credit Union Act 1997 already provides a mechanism whereby a savings protection scheme may be given approval by the Financial Regulator through the Registrar of Credit Unions, and the ILCU is currently engaged in discussions with the registrar with a view to approval of the SPS in a revised format under section 46. My difficulty is that the Act has been on the Statute Book for such a long time and this has not happened. The danger here is that it will not happen unless something pushes a development there.

There are two brief points I wish to make to add to what Senator O'Toole has said. The first is that, while many things have changed in the area of financial services, in the future we will need a successful credit union movement, just as we have needed one in the past. To declare my interest here, my father was one of the founders, in 1965, of the Dún Laoghaire Credit Union which was the third credit union established in the country. If I remember correctly, there was one in County Monaghan, one in Donore, and the Dún Laoghaire one was the third. A lady called Nora Herlihy was one of the organisers and I got to know and admire her a great deal. Those who created the credit union copied it from Canada, if I remember correctly, because there was a need for it at that stage. It has been a booming success. A wonderful job has been done in the credit union movement. The ILCU deserves much credit for it, although, as Senator O'Toole stated, not every credit union is a member of that league.

There is a tendency in some quarters to think that we do not need credit unions any more because there is a plethora of organisations offering credit, to any individual who wants it and, indeed, to many who neither need nor want it. In a few short years we have moved from a position in which many perfectly credit-worthy people found it impossible to get credit from the traditional banks, to one in which those same banks are practically forcing credit on their customers. Meanwhile, competition among lenders has meant that the costs of borrowing remain comparatively low.

Although that is the position today, it will no necessarily be so tomorrow. There is a cycle in financial affairs that is just as reliable as the tide coming in and going out, or the way that night follows day. One can be fully sure that this generous policy of the banks and other mainstream lending institutions will not continue for ever. There will come a time when they will seek to tighten credit, and that is when many ordinary people will find themselves squeezed. Listening to the radio this morning, that time may well be much closer than we think. It is vital, therefore, that we take good care to do everything in our power to preserve and conserve the credit union movement.

The day will come when the country will badly need the credit union movement, even more so than it needs it at present. In difficult times, a self-help organisation, which is essentially what the credit union is, comes into its own. It provides a mechanism for a community to meet modest financial needs within its own resources and without having to involve the not-always-welcome embrace of the financial services industry. In a country in which the main banks exercise such wide and largely unfettered power, it is necessary to defend strongly an institution that serves in many ways to counteract that very influence.

In many important respects it is legitimate to regard credit unions as quite separate and distinct from the financial services industry, but this is not how they would appear to people abroad if a major credit union were to fail and leave its depositors high and dry. It would be regarded as just one more banking failure. I am certain that untold damage would be done to our international reputation if people discovered depositors had lost their money because it was not secured properly by guarantees. Therefore, it is not only the credit unions that have an interest in this legislation but the whole financial services establishment. As long as deposits in credit unions remain unsecured, the financial service industry's reputation will be on the line and not just that of the credit unions themselves.

Is this the right legislation? Senator O'Toole touched on some points in this regard, particularly regarding governance. I am not sure what will happen but it seems that unless the legislation we pass enforces a very strict governance regime, it is unlikely it will meet requirements. Senator O'Toole said the scheme must be independent and I have little doubt about this. There is a very strong league of Irish credit unions but some credit unions are not involved in it. I accept the point they make that the legislation will only govern the Twenty-six Counties rather than the Thirty-two Counties and we must find a way around this.

Senator O'Toole also referred to transparency. There is little doubt but that it is essential. Unless the form of governance we put in place ensures transparency, it will not work.

The Senator's third point covered the certainty of operation, which is essential. I was concerned when I read that the proposed structure has not been set up in spite of there being powers to achieve this. If the introduction of this legislation will encourage the Minister to say he will address the matter, be it through this Bill or otherwise, it will serve some purpose. The Bill will achieve our purpose although it will not address a couple of exceptions to which Senator O'Toole has drawn attention.

The Minister should pay attention to this legislation. It may need some tweaking, perhaps on Committee Stage. The ideal would be to accept it and pass it as soon as possible in the knowledge that we will be protecting not only those who invest in credit unions but also the financial institutions in Ireland which would be damaged by a failure in the future. I am confident the credit union movement is doing all it can to ensure there will never be a failure but it is very hard to say there will never be one, regardless of the organisation in question or the service it provides. I therefore believe the Minister should consider seriously accepting the Bill as it stands.