Michael D'Arcy (Fine Gael) | Oireachtas source

I welcome the Minister and the Bill he is presenting to the House today. We have all been calling for initiatives to ensure more funding is put into the market more quickly, which is what this legislation seeks to do. The only criticism I have is that it would have been better to have enacted these provisions sooner.
The SBCI will essentially function as a wholesale bank, sourced from the Ireland Strategic Investment Fund, European Investment Bank, KfW and potentially other sources, charged with lending moneys to the retail banks, which will, in turn, lend to SMEs. Inability to access credit remains a problem in the Irish market. To give a small example, a man came to see me the other day who was looking to purchase a quad bicycle for his farm. More paperwork was needed for the €5,000 loan he was seeking than he was required to complete for a €200,000 loan he took out seven or eight years ago. That type of thing is not conducive to business. It is a minor example but indicative of what is happening.
I am not much concerned about which of our retail banks have access to the moneys that will be available from this fund, but I am concerned about how they will administer the funding. For example, will there be a ceiling on the margin they may charge per loan? Will there be any requirement regarding the differential between the interest rate charged by the SBCI to the retail banks and the rate they subsequently pass on to business customers? If a business falls into arrears or default, at what stage will the retail bank be told that it is not allowed to overcharge beyond a fixed figure? If the Minister does not have the answer today, we might discuss it further on Committee Stage. We all know of too many examples of banks overcharging while, on the other hand, they are never slow in telling customers to read the fine print. I do not know if such is possible, but I would like to see a ceiling put into the legislation whereby banks would not be permitted to engage in overcharging. Such a provision would give absolute certainty to businesses where they are seeking a loan over, say, ten years. In a context where the retail banks will be getting the benefit of a very low rate, my concern is that they will take the opportunity to do what they have done on too many occasions, namely, fail to act honourably where a business is experiencing a cash-flow problem or other difficulty. It should not be an option for the banks to use this fund to overcharge customers.
Following on from the point made by Senator O'Brien, 70% of jobs in this country are attached to an SME. I consider my own business, which has a full-time staff, to fit into the category of SME. The impression I am getting - it is a welcome one - is that this fund is mostly intended to assist smaller rather than larger SMEs. After all, the latter are capable of getting funding for themselves, while the situation can be much more difficult for smaller firms with one or two staff or whose owners are drawing only a small salary for themselves and perhaps one family member. Would it be possible - again, I do not expect the Minister to have the answer today - to define what is an SME for the purpose of this legislation? Is it a company with fewer than five staff, for example, or a firm with a turnover of less than €200,00? I do not have a fixed view on what the definition should be, but I would like to know whether including such a definition is feasible. If it is, it would be a way of targeting SMEs with smaller turnovers and fewer staff, that is, the businesses most in need of this type of support. Such a provision, if doable, would be a good day's work.
On assuming office the Minister for Finance took over not just a poisoned chalice but an unholy grail, but he has done a superb job in seeking to clean up the banking sector. The bedding in of the Irish Bank Resolution Corporation and National Asset Management Agency has helped us to get back in order, together with other policy directions he has taken. I am satisfied he is doing the right thing, too, in this case. The State does not need to go back into an ICC or ACC scenario, with the costly establishment of institutions and premises around the country. The retail sector is already there and will be given the opportunity to access these moneys. Having said that, I would like the controls associated with this initiative to be sharp controls. We must ensure there is no opportunity for chicanery - a word I often use in reference to the banks - in the operation of the fund. We do not need to go hiring people and establishing another banking structure. The pillar banks are there, as well as Ulster Bank and potentially other players who may enter the banking sector in the medium term. There is also the possibility of mergers in the future.
I welcome this legislation. We must ensure the right people get the opportunity to borrow at a low cost over a specified period. Such an arrangement will give certainty to everybody in business, whether theirs is a very small SME or a larger company.

I will leave it at that. If the Minister does not have the answer to these questions now, perhaps he will deal with them on Committee Stage.