David Norris (Independent) | Oireachtas source

I welcome the Bill. I have always been envious of friends and colleagues who are members of credit unions because they seem to be an efficient and socially welcome method of obtaining credit. There has always been a feeling of community about credit unions which is admirable. The same was true in the early days of building societies, when they were mutual societies, prior to being de-mutualised and privatised.

In general, I am very supportive of credit unions and of making them fit for purpose in these very difficult days. The days are difficult for credit unions, as was made clear with the establishment of the Commission on Credit Unions and the delivery of its report. Most of us have been lobbied by representatives of the credit union movement and indeed, I believe some of them are in the Public Gallery today. They are very welcome to Seanad Éireann. I cannot say I agree with all of their worries and perhaps they were a little overheated.

To follow on from what Senator D'Arcy said, I was contacted some time ago by a woman who was involved with her local credit union and she expressed precisely the same concern expressed by the Senator at the end of his contribution about the prospect of forced mergers. I welcome the suggestion that there should be some discussion on any such proposition because, at the end of the day, human elements are involved. We are providing very significant sums of money, through the taxpayer, to credit unions and we are, therefore, responsible for the way in which that is discharged. There is no doubt that in implementing more than 60 recommendations of the commission, the main aim is to insulate the credit unions against the very difficult storms that are currently raging. A sum of ¤500 million is being provided.

In addition to the briefings I had with the credit unions I also got a very interesting document from a former colleague in this House, Joe O'Toole, which I found very useful.

He adumbrates the background history. An interim report was published, public consultation was undertaken and the Commission invited and received submissions from the public and the credit unions themselves. They surveyed every credit union and nobody was denied a hearing. It was a fully democratic process at that stage. The report was agreed unanimously. It was acclaimed and welcomed by all the organisations comprising the Irish League of Credit Unions. Then it was reconvened to make suggestions about the Credit Union Bill 2012 we are debating. An implementation group was established. With this type of legislation, it is critical to have an implementation group so that it does not just remain on a shelf but that some group is charged with the implementation of the Bill.

When one considers the circumstances with which the implementation group and the Government were confronted - although the credit unions are and continue to be an excellent and vital part of our economic life - a series of problems emerge such as arrears, debt write offs, capitalisation issues and very large sums, perhaps up to ¤1 billion were tied up in this. In 2011, credit union arrears were more than ¤1 billion and bad debt provision was more than ¤800,000, without taking into account capitalisation requirements. That suggests a serious and threatening situation in credit unions which the commission was set up to address, and which the Minister addresses in the Bill.

The concerns expressed in the correspondence I received have been of a significant number but at least - thanks to the Minister indicating he is accepting and tabling amendments - some are being addressed, in particular the terms of service. It is appropriate that there should be a turnover of personnel on the board, and that opens up the whole administration to new volunteerism. It is not intended to stifle volunteerism. I gather in the initial proposal one would serve on the board for nine years and after nine years, one would be precluded for a significant period from serving again on the board. The credit unions lobbied for this to be amended to 12 years and the Minister has accepted that proposal. That seems to be a reasonable and good compromise. It is appropriate that there is also a clear separation between the board and executive functions. The idea of a volunteer treasurer handling everything and being responsible for everything gives rise to a conflict of interests. What the Government is doing in the Bill is appropriate, particularly when we take into account that very significant sums of taxpayers money are involved. There may be some confusion. One of the suggested amendments states - it does not seem to be an amendment - the League Board believes the new legislation should support credit union electronically enabled payments by all possible means. That is not an amendment, it is an exhortation. The situation, as I understand it, is that there is nothing to stop them doing it at present. They have the capacity and a number of credit unions provide these electronic facilities. It is very important, particularly with regard to small branches, that there is some degree of training and we must ensure the personnel are capable and the facility is up to standard. There is no point in having substandard provisions.

They are already supported in providing electronic services to their customers and that should continue. However, it should not continue willy-nilly. Historically, treasurers were elected to positions where they had very significant powers over very large sums of money while they may not have had any great professional skills or background in the management of such large sums of money or these complex organisations. This Bill proposes placing the executive function within the remit of the executive - the manager - with the board having powers of hiring and firing if he or she does not perform or report appropriately. I completely support that.

On the Central Bank legislation, the Minister in his speech has cleared up some misunderstandings. It is not a question of taking some large antiquated block of legislation and dumping it on the heads of the credit unions. The regulator for the credit unions, for example, who is centrally important, is established under Central Bank legislation so the Central Bank has to be involved. There is some resistance to regulation, some suggestion that regulation might be stifling. The difficulty in the financial sector has been light regulation or none at all. This very valuable area of our commercial life must be regulated properly. I hope there will be a fair amount of accord in this regard. The credit unions believed they were being insulted, that some of the regulations were burdensome and intolerable. This language suggests a degree of difficulty which is surprising, considering they were involved in the process at the beginning, that it was unanimously recommended that it be open at all stages and that the process on which the Minister embarked is perfectly rational in implementing the main recommendations - if not all - of the body consulted. We have a responsibility to the taxpayer.