Paul Coghlan (Fine Gael) | Oireachtas source

I welcome the Minister of State to the House to discuss what is obviously an important matter. This Bill is important legislation which will shape the future structure of the credit union movement that we all hold dear and are involved with in one way or another. That is why it is imperative to do the movement justice. We must ensure we take its views into account. In this context, the correspondence from the ILCU has been helpful in relaying the views of the wider membership of the movement. I am sure Members have studied it. I am aware the Minister promised to introduce amendments in this House upon the conclusion of work by the finance committee, although unfortunately I missed that work. Our contributions will therefore be ever more important. It is our duty to ensure we strike the right balance in this legislation and deliver a robust regulatory regime that allows the credit union movement to maintain its ethos and viability into the future.

Nobody can deny the major role credit unions have played in Irish society over the past 50 years. Credit unions play an active role in their communities and provide services to members that may have been denied by other more mainstream commercial financial institutions. It is the close knowledge of the volunteers that makes this possible. This element of the relationship is very important and allows for a sustainable lending model in which small loans are advanced. It has been stated by other Members of the Oireachtas that these small loans are the lifeblood of many families, especially in these recessionary times and in view of the current difficulties. However, the credit union movement has not been unaffected by the economic crisis and it is our duty to ensure the protection and future of the movement.

The ILCU was an active member of the Commission on Credit Unions. I am aware there were contrary views on offer but we must understand that the league must cater for the views of the wider membership. Furthermore, I understand there are some new elements in the Bill which were not considered by the commission. We must examine these closely. It was also brought to my attention that some of the issues considered by the commission are not reflected in the Bill. A number of sections appear to impose a new general obligation on credit unions to comply with unspecified financial services legislation. This was a matter discussed on Committee Stage in the Dáil and again I emphasise the importance of clarifying for the credit union movement which aspects of the financial services legislation will apply because a blanket imposition of legislation in this regard could be particularly burdensome for the movement. The Minister of State might outline to the House what legislation will apply, and it would be helpful if he were to state whether he intends to clarify this in the legislation.

We all know the credit union movement has an active role to play in the community, not only in providing financial services for members of that community but also in the significant contribution its members and volunteers provide to the administration of the credit union. One cannot state enough the important resource the credit unions have in their volunteers, particularly the smaller credit unions. Prohibitions and term limits on membership of credit union boards of directors were proposed by the commission, but it is felt by many in the movement that such provisions are too restrictive and represent a direct attack on volunteer participation on credit union boards. The aim may be to allow for renewal of the credit union boards, but the participation and involvement of volunteers, on which many credit unions rely so heavily, would be significantly undermined. The whole ethos of credit unions in this State, so distinct from that of other financial institutions, may be compromised. It could be said that on the one hand there is an impetus to align credit unions more closely with other financial bodies such as banks by imposing the type of governance restrictions contained in the Bill, while on the other hand, provisions for a more modernised service for members which could allow the credit unions to continue to compete alongside banks and allow for the modernisation of credit unions are glaringly absent from the Bill. These matters were discussed by the commission but have not been included in the Bill. Credit unions should be able to offer electronically enabled payment accounts. There are also opportunities for the sharing of member services between credit unions, which could significantly enhance services to members.

A number of Members in the adjoining House have raised the issue of the ability of credit unions to invest in Government-backed schemes. I raise an issue that should be explored in the legislation, which was raised by the movement, namely, the ability to raise additional capital. This is especially relevant against the backdrop of a restructuring of the movement and in the context of a sustained reduction in income. The provisions of the Personal Insolvency Bill and the new insolvency service-----