Minister cautions against credit unions changing roles

 

CREDIT unions should not become de facto banks or building societies, competing head to head in the housing market and for major corporate business, the Minister of State for Commerce, Science and Technology, Mr Pat Rabbitte, told a special 700 delegate general meeting of the Irish League of Credit Unions in Limerick yesterday.

Addressing the meeting called to discuss the Credit Union Bill, the Minister declared it is important that credit unions are not used as de facto tax avoidance schemes by individuals who have accumulated significant personal wealth. Credit unions are a mutual form of organisation and they are a not for profit form of undertaking, based firmly on the common bond principle.

Referring to the limit of £20,000 on loans in the Bill which is causing concern to the credit unions, the Minister said he was prepared to consider increasing this limit by way of amendment to the Bill in the Dail if the credit union movement as a whole brings forward a coherent and convincing case for his consideration.

"If I can be persuaded that there are significant numbers of ordinary people out there with more than £40,000 (shares and deposits) to put in to their own credit unions, I am prepared to reflect on the matter. Otherwise, I think the balance is about right."

The Minister revealed that he got agreement from the Government on last Tuesday to prioritise the enactment of the Credit Union Bill and it is his intention to take the Second Stage in the Dail within a couple of weeks of the Budget debate ending.

Mr Rabbitte pointed out that no precedent has been brought to his attention for a minister coming to discuss published legislation in advance with the consumers and the users of that legislation. He wanted to hear first hand the conclusions of the delegates before enacting the legislation.

"In the context of the revised limits proposed in the Bill, I am not sure that this problem is a real one. It is useful to recall that the present shares limit of £6,000 was set in the mid 1980s. If this figure had been indexed linked to inflation in the interim the figure would now be less than £9,000," he said.

However, he was concerned about credit unions being allowed, encouraged or expected to get into the business of risk lending to small and micro business as such. "On the other hand, I think that the way around this is to encourage entrepreneurs to become members of credit unions and, indeed, they might have their own credit union".

He also referred to the concern at the scope of the supervisory and regulatory role of the Registrar of Friendly Societies. His understanding was that the controls in the Bill were broadly consistent with the agreement made between the Credit Union League and the registrar and he pointed out that every decision of the registrar can be appealed to the courts.

The delegates, representing 1.4 million members throughout the State expressed "serious disquiet" about many provisions of the Bill, including the proposed limitation on the right of credit unions to own property and the proposed system of approval for new and existing services, which is viewed as both unrealistic and unwieldy.