Seanad debates

Tuesday, 4 December 2012

Credit Union Bill 2012: Second Stage

 

5:15 pm

Photo of Deirdre CluneDeirdre Clune (Fine Gael) | Oireachtas source

I am pleased to have an opportunity to speak on the Bill. I always avail of the opportunity to contribute on the operations of credit unions because, as other speakers have said, their importance is reflected in the community. I am an admirer of the credit unions in my constituency and the role they play, being rooted in the community and coming from a volunteer co-operative movement, a system of one member one vote where the board of directors is elected by the members. They play a very important role in our communities in providing funding to individuals who would not necessarily want to get involved with banks. Generally they are people of modest means with moderate or low incomes. Credit unions provide financial services, loans and savings opportunities. A movement with 3 million members and 400 registered credit unions must be respected.

The Bill is welcome. It is important that those 3 million members have confidence in the regulatory regime and that the credit union in which they are involved is run properly for the sake of all its members. Nobody would object to the regulatory regime being put on a firm footing. As with all institutions, credit unions are not immune from the financial challenges of recent years although they have not experienced the same issues as the banks. Since 2008 there has been a deterioration in some of the key financial indicators. The Irish League of Credit Unions said it had a deficit of almost ¤46 million in 2010 compared with a surplus of ¤15 million in 2009. The size of dividends paid by credit unions has been reducing. Some 75% of credit unions paid a dividend to their members in 2010. Some 12 months ago the Irish League of Credit Unions said the difficulties were having a direct effect on credit unions. If people's incomes are reduced that has a direct effect on the number of financial transactions being entered into. There were references to people buying property that would be perceived to be outside their remit but we do not have all the details. However, the financial situation in the community must have a detrimental effect on credit unions.

Like other speakers I had been contacted by credit unions in my area and yesterday I had a further communication from them. The three issues of concern have been addressed by the Minister but I look forward to discussing them on Committee Stage. One issue was in respect of legislation and the definition of "financial services legislation". The Minister stated that he will clarify those that would be required by credit unions rather than financial services legislation generally. I hope that will satisfy the concerns.

On the issue of terms for board members, I had long discussions with members. There is also the issue of corporate memory. It will be welcomed that the term for same has gone from nine to 12 years because a certain level of expertise has developed and it is important that is continued.

A certain level of expertise has developed and it is important that we continue to support it. This does not take from the fact that we need rotation, fresh blood, new ideas and the opportunity for new expertise to be brought on board.

The issues of shared services and electronic transfers are relevant. From what I know and understand some credit unions operate using these facilities and there is no legislative or statutory prohibition from using electronic transfers or shared services. It is an issue for discussion on Committee Stage and the Minister of State has acknowledged as much in his statement.

It is important that the credit union movement continues to grow, especially since many banks are closing down in our communities. We should continue to support the credit unions and allow them to grow in a fashion that gives confidence to their members and those who have dealings with them. I welcome the fact that 60 of the recommendations of the final report were included in the legislation.

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