Anthony Lawlor (Fine Gael) | Oireachtas source

The Minister of State is very welcome to the House. I dealt with him on a number of occasions in the past when I was a Member of the bigger Chamber, but I am privileged to have him in here. About seven years ago I was lucky enough to be in Benin in west Africa. I happened to be at the first AGM of a small credit union in a village. It was all operated by women. It was giving out dividends and people were paying back loans. Most of the loans taken out by the women were for small enterprises and businesses. The reason they were establishing these little businesses was so they could afford to send their children to primary and secondary school.

The whole ethos was that a credit union was established to help local people establish a little business, but the thing about it now is that credit unions have moved away from this. They state they want to lend more, but when we look at the figures in the report there is a 26% loan to asset ratio whereas throughout Europe it is more likely to be 40% to 50%. Perhaps this is something we should encourage credit unions to examine. Credit unions can have extended loans up to ten years. These are allowable up to 15% but across the board only 2% of loans extend to more than ten years. Credit unions can have up to 40% short-term loans but they are still beneath this. There are things the credit unions themselves can do to extend and increase loans because they have the capacity to do so with regard to the regulations as set down by the Central Bank.

I was fascinated to read that many of the representative bodies stated the existing regulatory environment is not appropriate. I remember sitting in a room when Naas Credit Union was asked to amalgamate with the defunct Newbridge Credit Union. As Newbridge Credit Union did not adhere to the regulations in place at the time suddenly we had to put in place stronger regulations. We have a fierce habit in this country of the pendulum swinging left to right and we can never get it to settle somewhere in the middle. If we can get it to settle down somewhere in the middle it would be great.

I want to speak about tiered regulation, which is something other people have raised. I am a bit nervous about it. If we have tiered regulation, and there is talk about three tiers or perhaps two tiers, at the point where an institution jumps from one tier to another suddenly a huge onus is placed on that small credit union to up its game and put in place the regulatory officers required by the Central Bank. There is a cost associated with this. There has to be a margin whereby instead of having a cut-off point there should be a couple of million euro on either side to allow an opportunity for smaller credit unions. I am not in favour of tiered regulation because there is a role for the Irish League of Credit Unions in this.

Recently in Kildare there was an amalgamation between Coill Dubh and Edenderry Credit Union and Leixlip Credit Union.The Irish League of Credit Unions wrote to the members of the credit union in Leixlip to say it could help them avoid a merger. What did it help them with? It could set up a regulatory body and smaller credit unions could feed into the process. People could be involved in regulation at an individual level and the Irish League of Credit Unions could be an umbrella body for the regulation required. The Minister might think about that.

I spoke about this issue a number of years ago in the Dáil and said that, as the umbrella body, the Irish League of Credit Unions could operate the regulation required, in particular for smaller credit unions, in order to avoid them having to amalgamate. Amalgamation means that credit unions distance themselves from the base where they started. Customers knew the person behind the counter but they then had to deal with someone different from another organisation following amalgamation.

I ask the Minister of State to consider tiered regulation. I am not happy because unless there is a margin to allow smaller credit unions time and funding it will not work. I also ask that the Irish League of Credit Unions be the umbrella body it is supposed to be. I thank the Minister of State for coming to the House.