I move amendment No. 47:
In page 32, subsection (2), lines 34 and 35, to delete paragraph (c) and substitute the following:
"(c) in the circumstances specified in subsection (3).".
This subsection defines circumstances in which a credit union shall not make a loan to a member. The conditions relate to the term and amount of loans and specify an individual loan limit of £20,000. While the provisions relating to loan periods have not provoked comment in the credit union movement, the £20,000 loan limit has attracted criticism. Following further consideration, I have decided to amend the conditions relating to individual loan amounts and this is dealt with in the new section 35. The purpose of amendment No. 47 is to substitute reference to the new subsection (3), which now deals with the limitations to the loan limit, in place of the former reference to the £20,000 loan limit.
Before drafting the new subsections (3) and (4) of section 35, I considered at length representations made by the league of credit unions, the credit union advisory committee, individual credit unions and Deputies from all sides of the House about the £20,000 loan limit. The 1995 figures for credit union annual returns, provided by the Registrar of Friendly Societies, suggests there are 1,000 credit union members with loans of or above £20,000. In its submission to my Department following publication of the Bill, the league suggested there are 683,643 members with loans from credit unions, of whom 1,436 or 0.2 per cent of credit union borrowers or 1 in 500 have loans of or above £20,000. A further 12,422 members, or 1.8 per cent of borrowers, have loans of between £10,000 and £20,000.
A number of contributions from Deputies on Second Stage, as well as the submission of the credit union advisory committee, suggested that a figure of £30,000 be substituted. I have decided to include that figure in the new subsection (3). However, based on current league figures, 276 members or 0.04 per cent of borrowers have loans of or more than this amount, and account must be taken of this circumstance. I have decided, therefore, that room for manoeuvre must be made to allow for future growth in the individual requirements of credit union members. The arguments of certain Deputies for flexibility to allow members to acquire their local authority houses were particularly persuasive.
I have decided that 5 per cent of credit union lending should be set aside for loans above £30,000. This 5 per cent figure compares with the 1 per cent of credit union lending which currently operates above the £30,000 figure, according to the figures submitted by the league. Subsection (3)(b) gives effect to this revised formula. Paragraph (a) also tries to address the formula which has been promoted by the Irish League of Credit Unions. A number of Deputies also took up this matter. The 1.5 per cent of credit union assets which is included in my amendment is the formula which applies in the UK. In the context of this subsection, the formula attempts to limit the maximum loan which an individual credit union member may obtain. In theory, 1.5 per cent of a credit union's assets means that a loan of about £1 million could be given to one member in the largest credit union in the State. This is a generous percentage, but I hope a credit union's board of directors would try to accommodate a number of members' applications for loans of more than £30,000, rather than seeking to accommodate one or two members with very large loan applications. I have no doubt this is the practice and that it will continue.
In addition to the more flexible arrangements set out in the new subsection (3), the new subsection (4) provides the further flexibility that in the circumstances of any individual credit union, the Registrar may grant a dispensation from the 5 per cent limit in paragraph (b) of that subsection. The purpose of this provision is to enable the circumstance of an individual credit union to be catered for by decision of the Registrar rather than having to rely on ministerial order or regulations which would change these provisions for all credit unions.
In summary, I am providing both a higher general limit of £30,000 and providing credit unions with the right to provide loans of a higher amount to their members on certain conditions. In addition, if a credit union has a unique requirement in this area, the Registrar is being permitted to act to modify the 5 per cent lending limit in such terms as he thinks proper.