Credit Unions deserve strong, effective and appropriate regulation
Speaking during the second stage debate on the Credit Union Bill 2012 in the Dáil today Sinn Féin Finance Spokesperson Pearse Doherty said “Credit Unions deserve strong, effective and appropriate regulation.”
The Donegal South-West Deputy said “Sinn Féin supports the legislation but we intend to table a number of amendments to make it a better Bill.”
Deputy Doherty said:
“Sinn Féin broadly supports the Credit Union Bill. We support strong, effective and appropriate regulation for the Credit Union sector.
“We want Credit Unions, their members and the communities in which they are rooted to have the highest levels of protection, probity, and governance.
“This can be achieved in a manner that is consistent with the distinctive ethos of the sector, its community based, volunteer and not-for profit ethos.
“Credit unions are not banks and therefore what may be appropriate regulation for one type of financial institution may not be for another.
“We strongly support the view expressed by the Irish League of Credit Unions and hundreds of individual credit unions across the country that this bill would be greatly improved by a number of amendments that will ensure the distinctive community and volunteering ethos of the movement is protected. This can be done at the same time as strengthening probity, improving governance and expanding the range of services available to credit union member and the wider community.
“At Committee stage Sinn Féin will be tabling a series of amendments aimed at improving the bill. We hope that the Minister will engage positively with us so that the credit union movement can continue to develop as a strong and integral element of local communities across the country.” ENDS
Note to editor: Full text of Pearse Doherty’s second stage speech on the Credit Union Bill 2012
Credit Union Bill 2012 – Second Stage Debate
Pearse Doherty TD
Ceann Comhairle there are a number of institutions in Irish public life that embody the very best of what our country has to offer. These institutions are based on values that should make every single member of this house proud to be Irish.
At a time when there is some much justified public anger at institutions that have abused the peoples trust, it is important to remind ourselves of the successes that endured even through the most reckless days of the boom.
The Irish Credit Union movement is one such body. It is not simply a financial institution, a lender, or a service provider. It is an integral part of every single community in every single part of our country.
It is based on values of community, of volunteerism, and of solidarity.
It was built and continues to be driven by people who are motivated by a desire to help their neighbours, their communities and their country.
It is grass roots and community led.
It was founded by people such as Nora Herlihy, Sean Forde and Séamus MacEoin who wanted to do something about the high unemployment, sickness, malnutrition, money-lending, hunger, poor clothing, poor housing the emigration that was so rampant in 1950s Ireland.
It was a response by civic minded people, true republicans, who were angry at the failure of the state to meet the needs of those sections of society who most needed support.
The people who gave life to the Irish Credit Union Movement recognised that the root of many of these problems lay in the scare availability and poor management of money.
In response they were determined to create an institution that would give people, particularly those with least power and resources in society, more control over their finances.
What started off as a small initiative by good people has now turned into a national movement, with more than 3 million members in every county and parish in the country?
It is a movement motivated by an innate sense of justice and fair play that used to feature so strongly in Irish public life.
An innate sense of justice that has been so battered and abused, particularly by senior politicians, bankers and developers in recent decades.
This morning our newspapers and radio stations are filled with stories of former bankers, civil servants and government ministers, many of whom were directly responsible for the social and economic crisis that has engulfed the country since 2008, living lavish lifestyles on pensions of up to €500,000 per year.
Meanwhile ordinary people are struggling to make ends meet, to pay bills, mortgages and in a growing number of cases even food. They are frightened that December’s budget will make their lives even harder – increase their tax burden, reduce their household income and withdraw their vital services.
People are falling into even greater levels of debt while the Government is standing idly by and breaking so many of their election and programme for government commitments.
And just like the 1950 it is institutions like the Credit Union Movement who are there ready and willing to pick up the pieces, to fill the gap left by Government refusing to do what is right by ordinary people.
Of course credit unions are not perfect, individuals can and did make mistakes, it would be naive to suggest that the movement was unaffected by the boom.
The Credit Union Movement themselves would be the first to admit that the regulatory context in which they operate is in need of real reform. In fact it is the Credit Union Movement who has been the leading advocates of that reform.
This is the context in which todays Bill must be set. The Bill is the latest in a considerable process of engagement between credit unions, their members, other interested parties and the Department of Finance. The Commission on Credit Unions convened by the last Government made it detailed recommendations in March of this year.
The Oireachtas Finance Committee and the Department of Finance have continued to engage with all stakeholders since then in order to ensure that the subsequent legislation meets aspirations set out in the Commission report.
Sinn Féin broadly supports the Bill, and we commend the work of both the Commission and the Department in translating those recommendations into the Bill before us.
Our core position is very clear. We support strong, effective and appropriate regulation for the Credit Union sector.
We want Credit Unions, their members and the communities in which they are rooted to have the highest levels of protection, probity, and governance.
We believe that this can be achieved in a manner that is consistent with the distinctive ethos of the sector, its community based, volunteer and not-for profit ethos.
Of course credit unions are not banks – and therefore what may be appropriate regulation for one type of financial institution may not be for another.
But let us nail the myth being peddled by some in this debate - that calls for regulation that fits the distinctive ethos of the Credit Union movement are somehow calls for lighter regulation.
Nothing could be further from the truth. So I want to repeat we want strong regulation, we want high standards of probity and we want better governance.
So too do the Credit Union movement and we support them in this and commend them for taking the lead in promoting this.
The vast majority of what is in the Credit Union Bill meets these objectives. The substantive detail of the legislation, dealing with probity, restructuring and stabilisation has our support.
They represent sensible compromises between the different views expressed around the table of the Commission on Credit Unions.
They represent the substance of the legislation and in Sinn Féin’s view the officials in the Department of Finance have got these sections right.
However we do have a number of significant concerns with other aspects of the Bill which we believe are not consistent with the spirit or even letter of the Commission report and which will require amendment to be resolved.
There are also other areas of crucial importance to the future development of credit unions which will be determined by the regulations arising from the Bill which also need to be named during the course of this debate.
The first key concern we have is the proposal to apply historic Central Bank legislation from 1942 to 2011 to credit unions.
This was not considered by the Credit Union Commission has could have far reaching consequences for credit unions.
Part 2 of the Bill and in particular the definition of financial services contained in Section 6 give raise to real concerns.
In our briefings with the Department of Finance they stressed that only those portions of this considerable body of legislation and accompanying statutory instruments that already apply to credit unions will come into effect from this new definition.
However this is not explicit in the Bill and in our view should be.
We are also concerned with the application of the Central Bank (Supervision and Enforcement) Bill 2011 being applied to the credit unions.
Again there was no discussion of this at the Commission any recommendations made.
The implications for Credit Unions arising from this are far reaching and must be considered separately and dealt with separately from the Bill in front of us today.
There is also the important issue of shared services - one of the central recommendations of the Commission’s report and an issue that is of vital importance to the future development of the credit unions.
It is also an issue of importance to the full implementation of the government’s own financial inclusion strategy.
Again in our discussions with Departmental officials on this matter they have stressed that there is no need for additional provision on this matter, as existing legislation does not preclude credit unions from sharing back end services such as administration.
However this misses the point. The key shared services that the Commission and the Credit Unions are seeking are those at the level of the member – and particularly those relating to electronic payment accounts.
If Credit Unions are to continue to grow and service their members and communities they need to be able to offer a wider range of services including the ability to undertake transactions and access services not only from their own Credit Union, from also from other unions as well.
If the Government has an objection to this then it should be put on the record. Otherwise the Bill should be amended to allow for the development of these kinds of member level shared services.
Another omission from the Bill relates to the enormous current and future potential of some Credit Unions to invest in socially valuable schemes and projects.
Given the level of unemployment and emigration and the continued lack of private sector investment in the local economy Credit Union funds appropriately backed by Government guarantees could be invested sensible in schemes and projects that could create employment, develop local infrastructure and services and assist in local social and economic development.
The explicit naming of this in the Bill would be of enormous assistance in the unlocking of what could be a significant source of investment particularly in communities experiencing high levels of social and economic disadvantage.
One of the issues that has most exercised Credit Unions at a local level in both rural and urban communities are some of the proposed governance changes particularly in relation to term limits on directors of credit unions and the prohibitions on membership of boards.
Sinn Féin strongly shares the view of the Credit Union Movement that portions of these sections of the Bill are unnecessary, anti-democratic and in some cases could undermine the volunteerism on which individual credit unions are based.
Small urban and rural credit unions, which operate from a very small pool of potential volunteers, may not be able to meet the very strict exclusions that are set down in the Bill.
Again the Credit Union Movement have presented very coherent arguments in support of the amendment of the relevant sections of the act which we hope Government will respond positively to.
If not Sinn Féin will table amendments to this section of the Bill at committee stage.
Credit Unions are also concerned with the proposed removal of the office of Treasurer as outlined in Bill.
We accept the argument underlying this section of the Bill that the current role of Treasure requires reform but also agreed with the Credit Union Movement in their view that the position could still be retained for the purpose of ensuring the presentation of timely accounts and presentation to members at Annual General Meetings.
Two final issues which I would like to raise Ceann Comhairle do not, in Sinn Féin’s view require amendments to the Bill but do need to discussed so that the if and when the final bill is enacted these specific aspects of its implementation are done in the right way.
There is clearly a need from a regulatory point of view to group credit unions into bands or tiers for the purposes of applying different levels of regulation. Everybody is agreed on this. However Sinn Féin shares the view of the Credit Union movement that the scheme as suggested by the Commission on Credit Unions could be improved upon.
We were heartened to hear from Department officials that there appears to be recognition of this and would hope that when the Minister comes to deal with this issue he will outline a scheme that is not based on size alone but also incorporates the levels of risk and complexity involved within credit unions.
There is also the thorny issue of the relationship between the Credit Unions and the Registrar of Credit Unions.
We have spoken many times before in this Chamber about the negative impact that on-going lending restrictions imposed by the Registrar on individual credit unions is having, on the credit unions, their members and communities more generally.
We have also articulated the strong feeling among many Credit Unions that the Central Bank and Regulator are not on the same page when it comes to the future development of credit unions.
The request by the Credit Union Movement for a formal written Memorandum of Understanding between the Regulatory authorities and the credit unions could, if got right, go some way to repairing what can only be described as a very strained relationship.
The detail of such a Memorandum could be developed at a later stage by the Central Bank in consultation with the implementation group and clearly the legislation should not deal with the detail to this.
But a commitment from the Minister during the passage of this legislation that a Memorandum of Understanding should be developed would be a very welcome development indeed.
Ceann Comhairle, these are the key points I wanted to raise during today’s debate. This is a good Bill. With amendments to a small number of sections it could be a very good Bill. And I hope that the Minister is willing to engage with the opposition in Committee to strengthen a piece of legislation that all parties in this house believe is not only timely but necessary.
I do have to say that I was genuinely disappointed when I read in the newspapers some weeks ago former members of the Oireachtas deliberately misrepresenting the legitimate concerns of the Credit Union movement on specific aspects of this Bill.
The suggestion that those of us who want to improve this Bill are somehow opponents of reform or worse still opponents of strong regulation is simply false.
Sinn Féin, like the Credit Union movement, wants strong, effective and appropriate regulation.
It is necessary for credit unions, for their members and their Communities.
There is much to commend this Bill to the house. But let’s make sure that the final Act is fit for purpose and make the necessary improvements at committee stage to ensure that the final Bill has the approval of every Deputy.
The Credit Union Movement and the people who keep it alive make me proud to be Irish.
They represent the very best of what it means to be Irish today.
I share their values, I share their vision and I believe that given their commitment and contribution to Irish society over the last half a century we owe it to them to pass the best possible piece of legislation that the Oireachtas can deliver to safe guard the future of the Credit Union Movement and all those who benefit from it.