LEGISLATION to give credit unions power to expand the range of financial services they provide is expected to be published before Christmas or very early next year, according to official sources.
As well as allowing credit unions to expand into new activities such as the provision of automated teller machines and debit cards, the new bill will update and consolidate aspects of the 1966 Credit Unions Act and earlier Industrial and Provident Societies Acts. The new bill will replace all previous legislation on the credit unions.
Supervision and regulation of the credit unions will remain the responsibility of the Registrar of Friendly Societies, Mr Martin Sisk. The registrar's supervisory powers will be strengthened and provisions for control and regulation will be modernised to ensure the safety of members funds.
Under the new legislation, the current limits on the number of shares a member can hold will be increased, the term for which funds can be loaned will be increased and credit unions will be able to offer current accounts with debit cards. The maximum shareholding a member can hold will be increased from the current limit of £6,000 to £30,000.
The present five year statutory limit on the term of loans will be abolished and replaced by a stepped basis for lending related to total loan portfolio of the union. Loans for periods of more than ten years must not exceed 10 per cent of the unions total loan portfolio, while loans for more than five years must not exceed 20 per cent of the total portfolio.
Credit unions will be required to set up bonding or insurance arrangements to cover losses through fraud or dishonesty. Credit unions will be able to act collectively to provide services which individual credit unions would not be able to provide on their own.
A first draft of the bill, which has about 200 sections, has been examined in the Department of Enterprise and Employment. Some sections have been returned to the legal draughtsmen for amendment. Before it can be published the bill has to be circulated to Government departments for observations, after which it has to be formally approved by the Government. After publication the provisions will have to be discussed in the Dail and approved before it can be enacted.
The Irish League of Credit Unions, the umbrella body for the 422 credit unions in the Republic, has been looking for new legislation since the 1980's. The "Bundoran" document produced after a conference in Donegal first set out how the unions wanted to develop.
The ILCU's secretary, Mr Tony Smith, said that, while credit unions want to offer members current account facilities, they are not interested in cheque books, which he described as "expensive and ineffective". Debit and Laser type cards to allow members put money into their accounts and withdraw directly where what the unions would consider as technology is becoming more secure, he said.
"Credit unions are not banks and do not want to become banks," he insisted, stating that they would be different because of the way in which services were provided.
"We want to be able to offer a full range of financial services to members but the difference will be, not in the service, but in the way it is provided," he said.
As well as submissions from individual credit unions, among the bodies consulted during the preparation of the new bill was the ILCU advisory committee appointed by the Minister.
In drafting the legislation, the Minister has been anxious to facilitate growth and development without making changes which could damage the ethos of the movement. Credit unions are nonprofit making organisations and are mutual societies run by members for members.
Each member has one vote regardless of the amount of money he/she has deposited or the number of shares held. Each individual union has a board made up of members and a supervisory committee which can run spotchecks on the books at any time.
