Michael D'Arcy (Fine Gael) | Oireachtas source

I welcome the Bill which is a necessary measure. It is also welcome that the Minister for Finance, Deputy Michael Noonan, is prepared to take on board a large number of amendments to it.

The credit union movement is perhaps one of the best examples of the work done within the voluntary sector in Ireland. It is organised and almost like a terrorist organisation in that it operates on the basis of a cell structure. Each cell is independent but overseen by others. The work done by credit unions is superb and I am satisfied that we are going to need a lively, strong and vibrant credit union sector.

I wish to outline my experience of the credit union movement in the 1980s when I was a teenager. I recall that those who were members of credit unions at that stage were not those for whom the latter were originally established. Every person involved in business throughout the country was then a member of a credit union because, as is the case now, the banks were not lending. Those to whom I refer needed money to keep their businesses going and they obtained it from their credit unions. At present, the banks are not extending credit to businesses and people are again seeking money from their credit unions. It is often forgotten but the only way out of the economic morass in which we find ourselves is through the creation of jobs. Credit unions are providing the vital lifelines - in the form of cashflow - which people need and the banks are not making available.

I made the point last week that the reduction in the amount of the banks' liabilities covered under the ELG from ¤375 billion to ¤78 billion in four years was probably too great. The reduction in exceptional liquidity assistance from the ECB and the Central Bank from ¤186 billion to less than ¤100 billion is probably also too great. It is too much to expect the banks to lend when reductions of this order have been made. The expectation was that the two pillar banks were to lend ¤3.5 billion each, but when one considers this matter in the context of the reductions relating to the ELG and the ELA to which I refer, one can see who is losing out. The credit union sector is picking up the slack in this regard.

It is welcome that changes are going to be made on Committee Stage. I look forward to discovering what these changes will be and have no doubt that they will be the subject of much discussion.

The Minister of State has indicated that section 11 amends section 35 of the Credit Union Act 1997 regarding lending and that "It provides that the ability of the loan applicant to repay shall be the primary consideration in the underwriting process." That is my major concern about the Bill. The one thing the credit union sector has retained is knowledge of its customers. This is not the case with the banks which have excluded the knowledge to which I refer. It does not matter what information a branch manager sends to the underwriters employed in a bank's headquarters. They do not care because they operate on the basis of criteria and mathematical formulae. If such criteria and formulae are not satisfied, the bank will not lend. I am not referring to reckless lending in this regard; rather, I am concerned about the exclusion of knowledge. Such knowledge is local in nature and indicates that a person or his or her sons and daughters have always paid their debts. The local authorities, of which the Minister of State and I were once members, also possess such knowledge. This knowledge allows credit unions and local authorities to identify the families which always pay. If the position is tightened to such a degree that we remove the local knowledge and experience possessed by credit unions, I am concerned that they will go the way of the banks and no longer be able to loan people money.

It is a concern which I hope officials will note and respond to on Committee Stage.

I attended the opening of the credit union in Gorey, which was a lovely occasion. The facility was opened by the Nobel Peace Prize winner, Mr. John Hume, and it was one of those days when one saw the community at is best.

The credit union sector must be given the opportunity to advance into the digital age so that branches do not exclusively operate under the cell network. While they can continue to operate within the cell network, with oversight, provision must be made for linkages between branches, so as to strengthen the sector and make it more flexible. If a member has a credit union card, he or she should be able to withdraw cash from any branch in a network, be it in Westport, Letterkenny, Rosslare or Castlehaven. We need more flexibility and to allow the credit unions to embrace the digital age.

The restructuring of the boards can only be a good thing but I am concerned about how the restructuring will be advanced and facilitated. I would not be in favour of restructuring on the basis that one branch does not want to merge with another. Credit unions must be reasonable about such matters and simply not wanting to merge with another branch is not a good enough excuse. However, if one branch is steadfastly against merging with another, provision must be made to give it a hearing. I welcome the Bill overall and look forward to examining it in more detail.