John Kelly (Labour) | Oireachtas source

I hope to be a good deal briefer than five minutes. I welcome the Minister of State to the House. Prior to Senator Quinn speaking on the credit union movement, no Member had expressed any involvement in it. I am pleased to say that I was a founder member of the credit union in Castlerea, County Roscommon, in the late 1980s. I know what is involved in setting up such a body and the hours, days and years it took to establish it. I was a director for ten years and a teller for ten years. If I am complimentary of the credit union movement, the House will fully understand why because I see the great work it does.

As Senator Quinn noted, it is important that we do not tar the credit union movement with the same brush that the banking sector, rightly, should be tarred with.

The Irish League of Credit Unions has campaigned for radical reform in this area and it is broadly positive about the majority of the provisions. However, some elements of the Bill were not considered by the commission. There are requirements under financial services legislation which have not been detailed in the Bill or which are referred to but not in a specific way. It is something of a catch-all scenario. We need clarity in the Final Stages of the Bill with regard to this issue.

The issue of term limits has been raised. I have some experience in this area, purely from my participation in anything related to volunteerism. I know that most of the original directors of the Castlerea Credit Union, of which I was a founder member, are still directors today. This is not because they want to be, it is because it is not possible to get volunteers to do anything now. It is important that any prospective volunteers for the role of director of a credit union should be tellers first in order that they know what they are doing and what the job is about. It is not as simple as recruiting. In recent years some members of the same credit union have passed away and it has been difficult to recruit volunteers as directors. I am unsure about the associated provision in the Bill. I suggest that in the case of the credit union I have referred to, if people have been directors for the past 25 years they should be left on the board and perhaps the new provisions should apply to new members.

It is important that credit unions are given a chance to provide enhanced services to members and so on.

The proposal regarding the provision of social finance for Government guaranteed schemes is an excellent one. I know that there are other organisations that can do something similar, but if there are local projects which are Government-backed, local credit unions should be allowed to play a role in them.

In the context of the Central Bank (Supervision and Enforcement) Bill 2011, I hope the Central Bank will not come down too heavily on credit unions because it is important that we do not take away the flexibility in the sector. I am also concerned that credit unions will not be forced to pay the price for what the banks did to the economy. Credit unions play an important role in local communities and legislation should not take away from the ethos of the credit union movement.

I have raised the matter of guaranteeing loans on numerous occasions in this House and not many of my colleagues believed me when I said what I said. Many of them had never heard it said before and checked to see if I was correct in my assertion. If one guarantees a loan for someone else, one hopes and prays that the loan will be repaid. If it is repaid after a year or so, one blesses oneself and breathes a sigh of relief at being let off the hook. However, one will not be off the hook unless one ensures one's name is removed from the guarantee. When one signs a guarantee, one is not just guaranteeing the particular loan but also guaranteeing the person who took it out for life. It is not a simple process to withdraw from a guarantee. One must obtain the bank's permission to have one's name withdrawn. It is very important that people are made aware of this because many individuals have been caught out. As we can see from the way the banks are conducting their business, they will take any scalp they can get. If a guarantee was given and is still in a bank's files and the guarantor is still alive, he or she should withdraw his or her lest he or she is made liable for future borrowings.