Oireachtas Economic Regulatory Affairs Committee Member Deputy Sean Sherlock, who has had extensive consultations with the Credit Union representative bodies has called for common sense to prevail in relation to future regulation and credit management of the sector

The Central Bank Bill, which is currently going through the Dail will amend the Credit Union Act in a manner that will affect their ability to reschedule loans and pay dividends at the same time.

"I have expressed concerns on the floor of the Dail about Part 7 of the Bill which seeks to amend Section 35 of the Credit Union Act. This will make it impossible for credit unions to undertake rescheduling and pay a dividend to members as the cost to Credit Unions of having additional reserves, arising from the rescheduling, would leave nothing to pay out by way of Dividend."

"This could cause members to withdraw savings from credit unions, resulting in CU's having less money to loan out, and forcing members into the hands of loan sharks and money-lenders. The Minister for Finance undertook, in April 2009, to review Section 35 of the Credit Union Act 1997 to make it easier for credit unions to accommodate members desiring to reschedule loans due to the recession.

"Changes to the legislation will lead, if unamended, to a more restrictive regime around credit unions, denying them the ability to meet the needs of some members impacted by unemployment, wage cuts and public service levies will be aware that the Economic Regulatory Affairs Committee has undertaken extensive consultations with all of the representative bodies in relation to this and other Regulatory provisions.

"I will go so far as to say that the Economic and Regulatory Affairs Committee consultations have surpassed those of the Department of Finance, in that The Department of Finances consultation process has been very limited, and technical difficulties are now manifesting on the eve of this legislation. I believe there has to be a greater consultation period allowing for some degree of latitude so that ordinary members wont be too restricted by a change in their financial circumstances."

"The Registrar of Credit Unions viewed the proposed legislative change as an opportunity to impose yet more stringent reserve and liquidity requirements upon Credit Unions.

This has to be seen in the context that Credit Unions are the most reserve-rich financial institutions in the state. The Registrar introduced a Regulatory or non-distributable minimum capital reserve requirement of 10% for credit unions in 2009 - a very stringent reserve requirement given that banks are baulking at their new standard of 8%. It should also be measured against the fact that the vast majority of credit unions benefit from an additional layer of protection in the form of a self-funded, mutual stabilization fund, the Savings Protection Scheme of the Irish League of Credit Unions."

"There is a very real danger of over-egging the cake here. The Registrar's proposes to apply his Section 35 requirements to ALL credit unions, regardless of whether a credit union wishes to avail of the extension to the Section 35 limits or not. This simply does not make sense."

"The Registrar is proposing a liquidity requirement of 25% to 30% where the Section 35 exemption is availed of. Even the current 20% liquidity requirement is very onerous when measured against the standards the Regulator currently applies against banking."

"There is every danger here that the combination of the Registrar's and Minister's proposals will have the impact of rendering it impossible for credit unions to pay a dividend to their members. If all surplus funds must be ploughed into yet additional reserves, then credit union dividends will suffer, driving funds out of responsible credit unions and into irresponsible banks."

"No credit union has needed to be bailed out by the state, and the Minister needs to remember this."

"No tax-payers' money has been poured into a single credit union. In addition to this, the vast majority of credit unions are part of a voluntary, mutual stabilisation fund which acts as a back-stop to the State Guaranteed Deposit Guarantee Scheme, and there are ongoing calls for the extension of such a stabilization scheme to be regulated by the Registrar of Credit Unions and extended to all credit unions in the state."