HC Deb 30 March 1979 vol 965 cc887-9
Mr. Denzil Davies

I beg to move amendment No. 19, in page 8, line 14, leave out from beginning to ' and' in line 17 and insert— ' (1) A credit union may borrow money from an authorised bank or temporarily from another credit union or an association of credit unions but the amount so borrowed'.

Mr. Deputy Speaker

With this we may discuss Government amendment No. 20, amendment No. 21, in clause 12, page 11, line 3, after ' union', insert ' provided the consent of the Treasury has been obtained'. and Government amendment No. 26.

Mr. Davies

These amendments are consequential to previous amendments and a new clause, the purpose of which was to align the Credit Unions Bill with the Banking Bill. The amendments were circulated in draft in Committee. There are slight differences but they are only technical.

Mr. Powell

I believe that a number of credit unions will be grateful for these amendments because there has been some doubt, as the Bill previously stood, about the possibility of credit unions lending to one another—inter-credit union loans in other words. I understand that these amendments remove any possibility of doubt. I am obliged to the Minister.

Mr. Geoffrey Finsberg

My amendment No. 21 takes a slightly different line from that taken by the right hon. Member for Down, South (Mr. Powell). My amendment makes the responsibility that of the Treasury rather than the registrar.

The trustee savings banks are anxious. They say that the Bill as it stands permits a credit union to lend to another credit union. It encourages a credit union to lend funds at risk and encourages credit unions to look to each other rather than to their members and the careful management of their funds. The Bill undermines to some degree the common bond of members which one imagines that credit unions want to propagate. In some way they should be self-policing.

I do not contest the arguments in favour of the other amendments. I suggest that it would be more helpful if in this clause we provide that the Treasury should be consulted with a view to obtaining its consent.

It may be that the Minister of State is not prepared to go along with that in its present form because, perhaps, to have to give the consent to a loan of £500 would be a total waste of time. Will he therefore consider whether a figure should be inserted below which the registrar would give consent and above which the Treasury would have to be consulted and give its view? I do not wish to press this too far, but it is a point which might helpfully be cleared up by the Minister.

Mr. Denzil Davies

We are concerned here with temporary loans where one credit union wishes for a short period to assist another. The hon. Member for Hampstead (Mr. Finsberg) wants to insert the element of Treasury consent. I think that he will accept that Treasury consent should not be required in these cases. They would concern fairly small cases. I take the point that was made in Committee by the right hon. Member for Down, South (Mr. Powell) and others that it would be beneficial if credit unions could help each other out temporarily in this way. I do not think that there is scope for abuse here. If there were, the registrar would have overriding power to keep his eye on things.

I do not see a problem, and I think that the fears expressed by the trustee savings banks are not well founded. The registrar, in exercising his overall powers, would keep his eye on this as he would on other aspects of the operations of credit unions. I hope therefore, with that assurance, that the hon. Member might feel at this stage not disposed to press his amendment.

Amendment agreed to.

Amendment made: No. 20, in page 8, line 19, leave out 'from' to end of line 21 and insert: 'an authorised bank shall be disregarded for the purposes of the limit on borrowing imposed by subsection (1) above if the credit union has obtained the consent in writing of the chief registrar.'.—[Mr. Denzil Davies.]

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