Introduction
I would like to thank the League for inviting me to be here today. It is certainly appropriate that I speak to you at this year’s AGM, given that this is the United Nations International Year of Cooperatives. The Government is very much committed to credit unions. We believe that you continue to have an important role to play both in the financial sector and in Irish society at large. Credit unions have been part of local communities in Ireland for over fifty years. In that time, many tides have come and gone in Irish and international affairs, but credit unions have remained a durable presence throughout the country. No doubt the strength of the movement over the years has been its not-for-profit mandate, community focus and, above all, the dedication of thousands of volunteers.
Challenges
In the Programme for Government we put forward a commitment to putting in place a Commission on Credit Unions. Within weeks of taking office, the Commission was established as a priority. The ambitious terms of reference set for the Commission — and its broad yet representative membership — showed the seriousness of the Government’s commitment. The Commission process has enabled discussions on the future of credit unions to take place in a considered and professional way. I know that the Chair of the Commission – Professor Donal McKillop – and other Commission members are present here today. I would like to commend them on an excellent report, which has dealt with a panoramic range of issues and brought forward thoughtful – and at times thought provoking – recommendations. I would like to thank the League for its full commitment to the process. In particular, I would like to express my appreciation for Kieron Brennan and Fiona Cullen from the League for their valuable contribution to the Commission’s work in helping to represent the credit union perspective.
Minister’s Support for the Commission on Credit Unions
When I met the Commission recently, I gave my own support for the Report’s recommendations and expressed the Government’s agreement to their early implementation. The Report is indeed a landmark document. I have written to every credit union in the country to say that I consider the agreement of all Commission members to such an important package of recommendations as a most positive outcome. I would encourage you to take them time to absorb what the report has to say. While there are many reasons to be positive about the future, it is also important to recognise that the challenges facing credit unions are very real. We must be calm and constructive in acknowledging problems, just as we must be creative and open minded about solving them. There is a deep well of talent, commitment and energy among the volunteers across the movement. This will need to be harnessed if we are to work to bring Irish credit unions towards the mature stage of development seen in movements internationally.
Early implementation
Early implementation of the report will be important if we are to do this. I will be moving shortly to establish an implementation group — including credit union representative bodies — to monitor and advise me on progress in rolling-out the Commission’s recommendations. The forthcoming Credit Union Bill will give effect to the changes to regulation and governance outlined in the Report, which are essential for the development of the sector. These changes will be introduced on a phased basis over time and will be calibrated according to the tiered regulatory approach. The new framework will also be developmental. It will create the environment for credit unions to grow their business and improve the quality of services available to members. This will be important if credit unions are to adapt and compete in a changing financial sector, while still retaining core credit union values. The Bill will also establish the statutory stabilisation scheme to be funded by credit unions, as recommended in the Commission’s Interim Report. This will be an important tool to deal with undercapitalised but viable credit unions that meet the conditions of the scheme into the future. The Report’s recommendations on consultation, impact assessments and an appeal mechanism will further help to support a regulatory regime that is modern and effective; yet balanced and proportionate.
Restructuring
The key recommendation from the Commission is, of course, that restructuring of the credit union sector should be done on a voluntary, incentivised and time-bound basis. The guiding aims of restructuring are: the protection of credit union members’ savings; the stability and viability of credit unions and the sector at large; and
the preservation of the credit union identity and ethos.�
Restructuring presents an opportunity to stronger credit unions to develop a more sustainable business model. It also provides a mechanism to deal with the financial stresses in credit unions in an orderly and constructive way. Without restructuring, there is the risk that problems will unwind over an extended period and in a way that erodes member and public confidence. However, we must be realistic. The Central Bank will still have to take resolution action in cases where the circumstances warrant it.
Restructuring will not apply to all credit unions. Some credit unions will continue tooperate successfully on a stand-alone basis should they so choose, provided that theyhave a viable business model and are capable of meeting regulatory requirements. The restructuring process will be overseen by a Restructuring Board, or ‘ReBo’. I will move in the next few weeks to establish the ReBo to ensure that the challenging timetable for restructuring outlined in the Report can be delivered upon. Its Board will be constituted on the basis outlined the Commission’s recommendations, which will ensure that the credit union voice is well represented at the table. It is my intention that the ReBo would be established on an administrative basis initially to allow it to make an early start.
Concluding remarks
I know that you intend to have a full discussion on the Commission’s Report later today which will provide you with an opportunity to air and exchange views on its recommendations in greater detail. Before concluding, I would like to encourage you to engage with the process of change that lies ahead. I cannot promise that the process will be an easy one. Implementation will be challenging for all stakeholders. It will require a steadfast commitment to doing what is best for credit union members now and into the future. This will require leadership both at credit union and movement level. I have been encouraged by the responses to the Commission Report so far. I am confident that the mood and momentum now exist to bring about the change and renewal that is needed. The future is not a foregone conclusion. We have an opportunity to shape it. The abiding strengths of the Irish credit union movement that have brought it this far will stand to you in facing the challenges and opportunities that lie ahead. Thank you.