Denis Naughten TD asks Minister for Finance for commitment to amend legislation for credit unions.
Posted on: 21 May 2020
Independent Deputy Denis Naughten TD questioned Minister for Finance Paschal Donoghue TD in the Dáil yesterday on whether he will commit to amending the primary legislation for credit unions to reflect the unique community nature of the credit union movement. The ILCU thanks Deputy Naughten for his ongoing support for credit unions.
A radical review of the Credit Unions and Co-operation with Overseas Regulators Act, 2012 is now required. The legislative review we ask for has, as its twin aims, the maintenance of strong, independent regulation, and a clear role for the policy responsibility of the Minister for Finance to deliver on the development of a community based, co-operative, credit union movement. Credit unions should be enabled to deliver on an expanded range of community banking services as recommended by government and clearly required in the community.
A transcript of the conversation between Deputy Naughten and the Minister is set out below. We urge all credit unions to lobby their local TDs to follow Deputy Naughten’s example in getting the future of the credit union movement on to the political agenda of the incoming Government.
Deputy Denis Naughten
I now turn to the national economic recovery and the huge opportunity we have to involve Ireland's 241 credit unions, with assets of more than €18 billion, in assisting with cashflow and credit facilities for small and medium sized businesses, the main employers in this country, particularly outside the cities. Fundamental to this is the need for statutory recognition by the Central Bank that credit unions are not-for-profit, community-based and volunteer-led organisations. The Central Bank seems to have forgotten that in many parts of rural Ireland the credit union is the only open and accessible financial service in the community. Credit unions are not the same as banks and they should not be treated the same by the regulator. They are being discriminated against. The Irish League of Credit Unions has sought the type of assistance and flexibility being provided to the mainstream banks by the Central Bank to help the credit unions through the Covid-19 crisis, but to date no flexibility has been shown to them. I put it to the Minister that many of the customers who use credit unions are not wanted by the big banks. If these families cannot get access to loans in times of financial pressure, they are forced into the hands of loan sharks. That is in nobody’s interest. Will the Minister direct the Central Bank to deal equitably with the credit unions? Will he commit to amending the primary legislation in this area to clearly reflect the unique community nature of our credit union movement?
Deputy Paschal Donohoe
I have had two meetings in recent weeks with representatives and leaders of the different credit union movements. I found these very helpful and I plan to have another meeting in the coming week or two. I heard from them some of the concerns raised by Deputy Naughten. The Deputy will appreciate that some of the issues they refer to are regulatory matters on which I am not the decision maker. They are decisions that are made by the Central Bank of Ireland. I have passed on to the Central Bank some of the issues that were raised.
There has been further communication from the Central Bank with the credit union movement since the last meeting I had. I will meet the credit union movement again, have a discussion about where it stands, and see where these different issues are. I cannot intervene in many of the issues the movement has raised but I appreciate the really valuable role our credit unions are playing. As Deputy Naughten has rightly said, they support many citizens at the moment who otherwise would not be supported by our banks. I value the work they are doing and I will try to recognise that in the period ahead in my engagement with them. If there are things they ask for that I can do, I will look at those requests carefully.
Deputy Denis Naughten
I thank the Minister for his positive reply in respect of the role the credit union movement can play but I wish to bring him back to the question I asked about amending the primary legislation in this area. The reason I bring that to the floor of the House is that I believe there is a fundamental problem with the culture within the Central Bank of Ireland. When it comes to any type of draconian measure, clearly the credit union movement is considered the same as big financial institutions in this country. However, when it comes to giving a break to the financial institutions in this country, credit unions are treated very differently, as we are now seeing in practise in terms of Covid-19. There is blatant discrimination on both sides in respect of the credit union movement.
The Central Bank needs to make up its mind. The credit union movement needs to be treated uniquely, and the only way that can happen is if that is clearly reflected in primary legislation so that a different, balanced approach is taken to its regulation.
Deputy Paschal Donohoe
Respectfully, I am not in a position to give the commitment the Deputy wants to changing primary legislation. I will have to see what he is looking for first and I am sure he will share that with me. I believe that the legislation we have in place regarding how our credit union sector is regulated is very proportionate and fair.
On the comment he made about the culture of the Central Bank, I have to firmly disagree with him. The Central Bank of Ireland recognises the really valuable role our credit union movement plays and looks to treat it in a way that is fair and different from how it treats the established financial services in Ireland. I know there are issues that are always being looked at between those that are regulated and the regulator. In my experience of dealing with the Central Bank, however, it values the contribution that credit unions make to our country.