Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I am very pleased to discuss the issue of credit unions and I thank the Senator for raising it. He has a long-term interest in credit unions. He has raised this matter often in the past and will no doubt continue to do so because they have such a key role in Irish society. I look forward to a longer debate on credit unions taking place in the House on 2 March and I know the Senators present will contribute to that debate.

The Government recognises the importance of credit unions and the programme for Government contains commitments to both reviewing the policy framework within which credit unions operate and enabling the credit union movement to grow. That is precisely what I am doing at the moment and I am almost at the final stages of that process. If I were to summarise what I want credit unions to do, I want them to grow their lending. As the Senator pointed out, they have substantial deposits and investments but it is important they increase their lending too because that is how they will become sustainable. The programme for Government also contains a commitment to supporting credit unions in the expansion of services to encourage community development.

I was appointed Minister of State with specific responsibility for credit unions, and I am the first Minister of State ever to have been given that responsibility. I have carried out extensive stakeholder engagement with a broad range of credit union stakeholders in the past year or so. A summary of the proposals has been shared with all the credit union representative bodies and the final stakeholder engagement session has been scheduled for early March. To give some background, over the course of the past year and beyond, departmental officials carried out extensive negotiations and discussions with all the credit union key stakeholders. I have attended well over 20 meetings with the credit union sector over the past six or eight months. Towards the end of last year, we were almost at the final stages of getting various proposals from the sector as to what it wanted in the legislation and there was substantial agreement on that.

Even so, I gave a commitment that, before I finalised it and brought the decision to the Government, I would return for one final session to sign off with all the representative bodies. I have issued that document to them and they received it over the weekend. There will be a session in early March with all the representative bodies, chaired by me, and I hope that we will thereafter get full sign-off, before it then goes to the Government to lead to legislation. Any legislative proposals arising will go to Cabinet shortly thereafter. The proposals being considered should assist credit unions to invest in collaborative ventures that could be used to expand their mortgage offering.

It is worth noting that, as it stands, credit unions can and do provide mortgages. Fourteen of the 213 credit unions engage in mortgage-lending at various levels. As at the end of September last, credit unions had a mortgage book of €260 million, which has grown 26% year on year, although not all credit unions provide mortgages. Twenty of the credit unions account for 76% of all new house loans advanced, while 50 credit unions account for 98% of all new house loans advanced. Following the review of the lending framework, the Central Bank introduced new lending regulations in January 2020. At a combined mortgage and SME lending rate of 7.5% of assets, this provides capacity to provide up to approximately €1.1 billion of additional mortgage and SME loans, or €1.7 billion in total, and that was finalised only two years ago. Furthermore, additional lending capacity of up to 15% of asserts is available to credit unions, which can apply within certain conditions to the Central Bank for that. Four applications have thus far been approved, while one is in the process of being examined.