£50,000 ceiling agreed for credit union savings

CHANGES to the Credit Union Bill allowing maximum aggregate savings of £50,000 and giving formal recognition to the Irish League of Credit Unions, were agreed yesterday by the Select Committee on Enterprise and Economic Strategy.

The Minister for Commerce, Science and Technology, Mr Pat Rabbitte, told the meeting that the debate on the maximum amount of savings (deposits and shares) to be allowed was only of relevance to "exceptional cases

Only 222 of the credit union movement's 1.85 million members have savings of over £40,000, Mr Rabbitte said. He estimated that only 100 members, or 1 in 20,000, had savings of over £50,000.

The average member has £1,000 in shares and £100 in deposits. The original limits he had proposed were satisfactory but in response to the submissions made to him by deputies and the credit union movement, he had decided to introduce amendments.

Mr Rabbitte's amendments will allow for deposits of up to £20,000 and maximum savings of £50,000.

A credit union may allow a member exceed the limits but that member may not have more than £30,000 on deposit. The number of members allowed to exceed the limit must not exceed 1 per cent of the total number of members of the credit union. The" purpose of the measure was to allow longstanding members of a credit union who came into a "lump sum" to invest this in their credit union.

A dispensation from the 1 per cent limit can be given by the Registrar of Friendly Societies "on such terms as he thinks proper".

Mr Rabbitte, after hearing requests that he do so from deputies from Government and opposition parties, including Mr Eric Byrne of Democratic Left, said he would look again at the 1 per cent limit between now and Report Stage. However, he said he was "fairly resolved" with the position as it now stood.

Another amendment referred to the Irish League of Credit Unions in relation to expert bodies which might be consulted by the minister or the registrar. It gives "expression to their existence and their track record", Mr Rabbitte said.

An amendment from the Progressive Democrats removing any limits on savings was withdrawn. Mr Rabbitte said he did not want to see credit unions diverging from their mission of providing personal finance to their members. He did not want to see them "chasing corporate business".

The limits he proposed would allow growth but restrict the movement to its present "ethos". The unique tax status of credit unions had been preserved and this was something he favoured. He had not met the banks during the recent debate on credit unions, although his officials had after the Bill had been published.

The banks were "entitled to their view". If the Bill was going to allow for big corporate investors then issues which had been agreed on would have to be "re-opened".

Mr Rabbitte also said credit unions might "look askance" at people who wanted to make large deposits. He was sure no credit union would want to provide a "bolt hole for hot money".

During the meeting Mr Ned O'Keeffe, FF, thanked the minister for taking on board criticisms of the Bill which had been made by the opposition. However, Mr Michael Finucane, FG, said Government members had also, been lobbied extensively by the credit union movement and had met the minister. The committee stage of the Bill resumes today.