Credit union leader 'aghast' at prohibitions in new Bill

THE LIST of prohibitions on who can act as a director of a credit union in proposed new legislation will militate against smaller credit unions, an Oireachtas committee has been told.

A draft general scheme for the proposed new law includes a lengthy list of people who cannot serve as directors of a credit union, including people whose spouses, siblings, partners or children work in a credit union, even as volunteers.

The chief executive of the Irish League of Credit Union, Kieran Brennan, told the Oireachtas Joint Committee on Finance that he was “aghast” at the list of prohibitions that was being proposed.

Mr Brennan said the league was broadly supportive of the proposed law, but there were difficulties with some proposals.

He said it had a difficulty with the imposition of term limits for members of credit union boards because this was contrary to the democratic idea that was inherent in the credit union model.

The vice-president of the World Council of Credit Unions, Michael Edwards, told the committee that as far as he was aware no jurisdiction had such a law.

He thought the issue of term limits was best dealt with by way of bylaws.

Committee chairman Alex White said the proposed limit for an ordinary director was nine years out of any 15 years.

Mr Brennan said the rule that was being proposed did not exist for the financial institutions that had done so much damage to Ireland’s economy.

He said the proposed legislation would assign credit unions to different tiers of regulation depending on their asset size.

However, the league believed the model used in Britain and Northern Ireland was superior. That involved assessments as to a credit union’s complexity and level of risk.

Mr Brennan told Deputy Michael McGrath that some of proposed changes in the Bill would work against the principle of volunteerism.

Deputy Arthur Spring said it was high time the Central Bank was told that no credit union ever provided finance for the building of office blocks in Ballsbridge, Dublin, or for property investment abroad.

The credit union movement was in very good shape compared to other financial institutions. “What they are looking for here [in the Bill] is way over the top,” he said.

Mr Edwards told Deputy Joe Higgins that in the US credit union members could make withdrawals of up to $800 from ATMs run by credit unions around the union.

The committee will resume its discussions on the draft general scheme of the Credit Union Bill 2012 today, when a number of witnesses will appear.