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

I am delighted to have the opportunity to take part in this debate. This is my second visit to the Seanad in a week to discuss credit unions. I am encouraged to see the work of the credit union sector being given such prominence in public debate. I watched with interest the Seanad debate on the future of banking that took place in May 2021. I noted at the time that the role credit unions can play in community banking was raised many times during the debate.

My aim and the aim of the Government is to assist the credit union movement to become a strong, resilient and collaborative movement in Ireland. I believe that my appointment as the first Minister of State with responsibility for credit unions, together with the commitments in the programme for Government, demonstrates how strongly this Government supports the sector. The programme for Government contains commitments to review the policy framework within which credit unions operate; enable and support the credit union movement to grow; support credit unions in the expansion of services to encourage community development; and enable the credit union movement to grow as a key provider of community banking in the country. Those are direct quotes from the programme for Government.

When I consider growth of credit unions, I primarily consider growth of lending in order to increase both their income and their sustainability. The review of policy framework is a culmination of work officials in the Department and I have done over the course of the last 18 months. During 2021 submissions were received from all the representative bodies and the Credit Union Advisory Committee. I have met with all representative bodies; the registrar of credit unions; the Credit Union Advisory Committee, CUAC; the credit union CEO forum; collaborative ventures; and many individual credit unions. In total, I have held 27 stakeholder meetings with credit unions and over 100 proposals were submitted in writing. A summary list of proposals has been shared with the credit union representative bodies and a final stakeholder engagement session has been scheduled for early March. Legislative proposals arising will go to the Cabinet shortly thereafter.

I would like to share with Senators some of the detail of the proposals ahead of their submission to the Cabinet. I would like to give them a flavour of my thought process and the types of proposals likely to emerge. The first objective of the review is to recognise the role of credit unions. Credit unions have been part of and at the centre of local and workplace communities for over 60 years, tailoring their products and services to match their members' needs. We will consider a proposal which recognises the role of the sector in developing volunteers and acknowledges its role as a large co-operative movement in Ireland.

The second objective is to support investment in collaboration. Collaboration is necessary for the sector to grow. Even the largest credit unions do not have the scale to develop opportunities on their own. In my engagements over the past year, I have seen evidence of collaborations already under way. Sixty-six credit unions are now providing current accounts through collaborative vehicles, an increase of 15 in the last year. Three collaborative vehicles have been approved to support lending of up to €900 million to approved housing bodies. Every credit union now has the opportunity to invest in funding for approved housing bodies. That has happened in the last six months. Nineteen credit unions are approved for the State's revised Covid-19 credit guarantee scheme. Five credit unions have been approved for the Brexit loan scheme. Involvement in these schemes is a great example of co-operation between Government Departments and agencies and the credit union sector. The Government recently announced €8 billion of increased funding for retrofitting.

Credit unions' role as providers of unsecured credit makes them a natural partner of the Government to support our climate change agenda. Many credit unions provide retrofitting loans supported by collaborative ventures. Forty credit unions are collaborating with Cultivate to provide agri-lending. Twenty-four credit unions have partnered with Peopl to provide general insurance products to members and many more provide assurance products.

While there are positive developments, my message to the credit union sector today is to keep going and keep building on this good work. The Government is prepared to do all it can and will act where it is appropriate. However, it is also incumbent on all of those working in the sector, including representative bodies, directors, executive management and collaborative ventures, to be ambitious and to embrace collaboration and business model change as a matter of urgency. Credit unions will not be able to take the opportunity provided by the exit of Ulster Bank and KBC without collaboration to grow current accounts and SME enterprise and mortgage lending.

The third objective in the review puts forward proposals that will assist boards of directors to focus on strategic development. The proposals have been greatly assisted by the research conducted by the CUAC on the role of directors. This is a great example of data-driven research and analysis which greatly informs the policy debate and leads to concrete proposals.

The fourth objective is to improve members' services. The review takes account of the need and desire to keep improving services for members. Members should have access to the widest range of services available and they should be able to access these services no matter which credit union they are a member of. Those who have met me over the past 18 months know that I have carefully considered the value of the common bond to the members. I would not like to see the common bond being a barrier to members accessing badly needed financial services. The proposals put forward under this objective consist of practical improvements to the common bond. This will assist credit unions in providing more products to more members, while protecting the essence of the common bond. These proposals should help credit unions to improve their competitiveness by increasing the flexibility of some of the rules around the common bond. Given the changing landscape of the retail banking sector in Ireland, now is the time to implement these changes and modernise the way the sector interacts with its members.

The fifth objective relates to transparency of regulatory engagement. There is a need for better co-ordination within the credit union sector in its engagement with the Central Bank and also with other State bodies. The review will seek to include proposals to support regulatory engagement while respecting the need for regulatory independence.The review will not include any specific proposals to change regulations and-or regulatory limits.

I thank the Acting Chairperson and my Seanad colleagues for the opportunity to discuss the credit union sector. Given the role that credit unions play in Irish society, this is a topic worthy of discussion and debate. The Government does act to support credit unions.

Collectively, the credit institution resolution fund levy and the credit union stabilisation levy have been reduced, since 2019, by 56%. That is a reduction and a €6.7 million saving per annum for the credit unions. I look forward to hearing the views of my Seanad colleagues and thank them for their time.