Credit Union Bill 2012- Second Stage- 08/11/2012

At the outset, I congratulate the Minister for Finance for bringing forward this legislation. It allows for fundamental reform of the credit union sector, reform the sector campaigned for itself over a number of years. It is a radical reform and is part of an overall reforming agenda the Minister has embarked upon in the financial services, banking and credit union sectors.
As the Minister pointed out, this Bill arises from the deliberations of the commission that sat for nine months and included representation from the Irish League of Credit Unions. From the representations I have received on this Bill, however, there must have been a communications difficulty somewhere. Many of the people coming to our clinics to discuss this are not ad idem with the commission’s report and do not see it as reflecting their views. That is not the Minister’s fault but there is a divergence there based on the representations.
One could not overstate the impact of the credit union movement on this country over the years. There are 494 credit unions with 3 million members. We are top of the European league for credit union participation. That is a good place to be. The credit unions have had an impact on people’s lives, particularly poorer people, but everyone latterly in every village and town has felt the positive impact of the credit unions. The credit union is a self-help organisation based on the cooperative model and I congratulate the volunteers involved in them. They can be proud of what they have done and we should applaud them today, affirming their good work.
It is worth noting the Government is putting aside €500 million to address liquidity issues in the sector. At a difficult time for the economy, that is an enormous input by the Government in the sector and an affirmation of its good work. It merits mention that is the case. It is endemic of the malaise that affected the country that this is necessary and we must do it. Someone mentioned to me on my way to speak on the Bill today that the figure going into the credit unions is the same as the money that will be needed to build the children’s hospital.
There will be restructuring under ReBo but it has in my conversations with people from the sector I have noted that we should not always see big as beautiful. Many of the problems in the banking sector down the years suggest that big is not always beautiful; it was big banks that brought us to our knees. It is not necessarily always the right thing. While the facility to restructure might exist, I am glad to report that in Cavan, in my part of the county – Bailieborough, Shercock, Cootehill, Kingscourt, Ballyjamesduff, Virginia and Cavan town – we have very good, functioning credit unions. They are all doing their business very well and responding to local needs. Amalgamations are not always appropriate and while the potential should be there for such amalgamations, it should necessarily be the default policy position.
It is right to draw a distinction in the legislation between the role of the management team in a credit union and the voluntary directors, with the latter drawing up broad policy while the management execute that policy. Concerns have, however, been relayed to me by voluntary personnel. They are concerned they will have to engage in 15 to 20 hours per year of continuous professional development in the financial services field.
While professional development and lifelong education is meritorious, it is meritorious only when we buy into it on a voluntary basis and when it suits our personal circumstances. For a number of volunteers, however, it will not always be possible. Flexibility and common sense must be applied in this area, so volunteers would not be under too much sanction.
Furthermore, I appeal to the Minister on Committee Stage to look at sections dealing with the turnover of directors and the three year movement of officers. In the towns I mentioned, which caught Deputy Tóibín’s attention, and the successful credit unions in them, I could cite individual directors for whom the credit union has been a passion and lifelong commitment. I appeal to the Minister to look at this on Committee Stage to see if he can moderate that. I know the objective and theory behind it is excellent but it might not be possible in a small town to have sufficient volunteers for that level of rotation. That should be reconsidered and I ask the Minister to revisit that. It would be inappropriate to go through names but I can think of directors who have been in some of the credit unions for a lifetime. They are needed because they have a corpus of knowledge that is beyond reproach and they are recognised for their probity. The objective is to get rid of the opposite but we do not want to throw the baby out with the bath-water so this should be revisited.
The prudential requirements and Central Bank regulations are fair enough. It is wrong to describe the credit union as the poor man’s bank but it did provide that service, in addition to a multitude of others; in recent years, it was everyone’s bank. I would not want the credit unions’ capacity to make small loans based on local judgment removed.
I am concerned the Bill will regulate to the degree that role at local level might be removed. All of us know and can identify people in our community who would rather starve than leave a bill unpaid, people of the highest integrity but they might not have a good script through no fault of their own with the dislocation of traditional industry and the construction sector. They might not have a script to match their character but the local directors and management would know their calibre. I welcome the regulation in the legislation that the Central Bank must consult with the Minister and the credit union movement when drawing up regulations but I appeal to the Minister in dealing with the Central Bank on this element not to lose the capacity of the credit union to respond to a local need and local person of quality who should be supported at different stages.
That is worthy. It is also correct and a good thing that the Central Bank will modulate or supervise investment by the credit unions. The fact that many credit unions may have had an involvement with Anglo Irish Bank in the past cannot be avoided. We need regulation of credit union investments and I welcome that.
I welcome the legislation in its totality, in particular its reforming nature. I appeal to the Minister to consider three areas. First, the Minister should act to modulate the volunteer sector in order to achieve his objectives but also to deal with the situation whereby excellent personnel of high calibre are necessary in a small town for the purposes of continuity. Second, I ask him to consider restructuring as an option rather than as an imperative, where a good local credit union is operating. Third, I ask him to ensure, through his Department, that the ethos and the traditional function of the credit union, namely, helping out families in need at critical times in their lives, is not lost in the midst of new regulation.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website