Community ethos of CUs should be taken into account under new legislation – Deputy Humphreys

Fine Gael TD for Cavan-Monaghan Heather Humphreys has said that new legislation proposing to strengthen the powers of the Central Bank must be carefully monitored.

Speaking in the Dail on the Central Bank (Supervision and Enforcement) Bill, Deputy Humphreys warned against the dangers of over regulation in the financial sector and the effect that this will have for local lending institutions and in particular Credit Unions.

During her address, Deputy Humphreys - who is a member of the Oireachtas Committee on Finance, Public Expenditure and Reform - highlighted the potential impact of over regulation on the Credit Union movement.

“I welcome the fact that the Minister has referred the bill to the Commission on Credit Unions for a recommendation on its application to credit unions. In most other jurisdictions with a significant Credit Union presence, such as Canada and the USA Credit Union legislation is housed within a framework that takes account of the ‘not for profit’ people centred ethos of Credit Unions which is at the core of its principals and I would ask the Minister to take this into consideration.

“I would also like to impress the importance of carrying out a Regulatory Impact Analysis on any material changes to the Credit Union Act. No regulatory impact analysis was carried out in respect of the amendments to S35 of the Credit Union act.  Credit Unions had sought a relaxation of longer term lending restrictions and the Financial Regulator took the opportunity to amend Section 35 and put in place very restrictive provisioning requirements which means many Credit Unions now find themselves priced out of the ability to lend to their members or indeed reschedule loans to members who are now unemployed or on significantly reduced incomes. Proper regulatory impact analysis must not be sacrificed in the interest of easier oversight.

“In my experience the success of the credit union movement lies in the fact that it is cemented in the community for the community. Local knowledge, coupled with the trust and loyalty and special relationship with their membership that credit unions enjoy, is one of their greatest assets which cannot be measured in the balance sheet or taken into account in stress testing exercises. When considering supervision and enforcement of credit unions we need to take account of the special voluntary structure of credit unions which has served the movement well. We need to take cognisance of the continuing unique role of credit unions in society and in all of our communities, particularly in these difficult economic times.

I welcome the Bill but reiterate that with increased powers comes increased responsibilities and accountability. This should always be the case. It is important to remember that we do not live in an economy and that people are not just economic tools, rather we live in a society and community in which each of us has a responsibility for each other,” concluded Deputy Humphreys.

Fine Gael TD for Cavan-Monaghan Heather Humphreys has said that new legislation proposing to strengthen the powers of the Central Bank must be carefully monitored.

Speaking in the Dail on the Central Bank (Supervision and Enforcement) Bill, Deputy Humphreys warned against the dangers of over regulation in the financial sector and the effect that this will have for local lending institutions and in particular Credit Unions.

During her address, Deputy Humphreys - who is a member of the Oireachtas Committee on Finance, Public Expenditure and Reform - highlighted the potential impact of over regulation on the Credit Union movement.

“I welcome the fact that the Minister has referred the bill to the Commission on Credit Unions for a recommendation on its application to credit unions. In most other jurisdictions with a significant Credit Union presence, such as Canada and the USA Credit Union legislation is housed within a framework that takes account of the ‘not for profit’ people centred ethos of Credit Unions which is at the core of its principals and I would ask the Minister to take this into consideration.

“I would also like to impress the importance of carrying out a Regulatory Impact Analysis on any material changes to the Credit Union Act. No regulatory impact analysis was carried out in respect of the amendments to S35 of the Credit Union act.  Credit Unions had sought a relaxation of longer term lending restrictions and the Financial Regulator took the opportunity to amend Section 35 and put in place very restrictive provisioning requirements which means many Credit Unions now find themselves priced out of the ability to lend to their members or indeed reschedule loans to members who are now unemployed or on significantly reduced incomes. Proper regulatory impact analysis must not be sacrificed in the interest of easier oversight.

“In my experience the success of the credit union movement lies in the fact that it is cemented in the community for the community. Local knowledge, coupled with the trust and loyalty and special relationship with their membership that credit unions enjoy, is one of their greatest assets which cannot be measured in the balance sheet or taken into account in stress testing exercises. When considering supervision and enforcement of credit unions we need to take account of the special voluntary structure of credit unions which has served the movement well. We need to take cognisance of the continuing unique role of credit unions in society and in all of our communities, particularly in these difficult economic times.

I welcome the Bill but reiterate that with increased powers comes increased responsibilities and accountability. This should always be the case. It is important to remember that we do not live in an economy and that people are not just economic tools, rather we live in a society and community in which each of us has a responsibility for each other,” concluded Deputy Humphreys.