Draft law amending the Cooperative Savings and Loan Societies Act and, in connection therewith, amending other laws (671 SE) – first reading
Session: 15th Riigikogu, 6th sitting, plenary session.
Date: 2025-09-09 16:08
Participating Politicians:
Total Speeches: 41
Membership: 15
Agenda Duration: 40m
AI Summaries: 41/41 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The first reading of Draft Bill 671, initiated by the Government of the Republic, concerning the amendment of the Credit Union Act and related amendments to other acts, was on the agenda. Minister of Finance Jürgen Ligi presented the bill, explaining that since the amendments made in 2010, credit unions have lost their original community-based character and essentially operate as banks, but without adequate state supervision. This has led to a situation where depositors have lost tens of millions of euros due to insolvency, particularly elderly individuals who were counting on high interest rates. The volume of deposits has surged from 2 million euros to 87 million, the majority of which (76 million) is loaned out to commercial companies.
The primary objective of the bill is to halt the uncontrolled raising of funds from the public and ensure the protection of depositors. The only viable solution is that cooperatives accepting deposits must henceforth either obtain a banking license from the Financial Supervision Authority or establish a cooperative bank. Operating as a bank guarantees depositors protection by the Guarantee Fund up to 100,000 euros. The amendments will enter into force in three stages, with the ultimate goal that starting January 1, 2029, only banks or cooperative banks will be authorized to accept deposits.
During the debate, members of the Riigikogu raised questions regarding the proportionality and constitutionality of the bill, asking why merely strengthening supervision was insufficient and whether the radical requirement for restructuring did not unduly infringe upon the freedom of enterprise. Mart Võrklaev, representing the Finance Committee, stressed that previous attempts at self-regulation (such as the creation of a central cooperative) have failed, and supervision by the Financial Supervision Authority is necessary to ensure the protection of depositors. The Isamaa faction proposed rejecting the bill, but the motion was voted down, thereby concluding the first reading.
Decisions Made 2
The proposal by the Isamaa faction to reject Draft Act 671, initiated by the Government of the Republic, concerning the amendment of the Credit and Loan Association Act and related amendments to other acts, failed to gain support at the first reading (12 in favor, 41 against, 0 abstentions).
The first reading of Bill 671 has concluded. The deadline for submitting amendments was set for September 23rd at 5:15 p.m.
Most Active Speaker
Mart Võrklaev (a member of the Finance Committee, on the right) was the most active speaker, thoroughly answering most questions and clarifying the leading committee’s stance and the rationale behind the draft bill.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller informed us that we are moving on to the second item on the agenda, where we will be discussing the first reading of Draft Bill 671—amendments to the Credit and Loan Union Act and amendments to other related acts, with Minister of Finance Jürgen Ligi serving as the rapporteur.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi is presenting the Government of the Republic’s draft bill to amend the Credit and Savings Association Act, emphasizing that the 2010 amendments stripped these associations of their community character. This led to their rapid growth and, due to the lack of adequate state supervision, resulted in significant losses (e.g., ERIAL), with elderly depositors being the primary victims. Since these associations currently operate similarly to commercial banks but without strict financial oversight, the only solution is for associations wishing to attract deposits to henceforth obtain a banking license from the Financial Supervision Authority. This measure would also ensure depositors are protected by the Guarantee Fund.
Rahandusminister Jürgen Ligi
AI Summary
The Ministry of Finance's draft bill sets a condition for savings and loan associations: if they wish to continue accepting deposits, the association must obtain a banking license from the Financial Supervision Authority or form a cooperative bank. Furthermore, its activities will be subject to state supervision, and depositors will be protected through the Guarantee Fund for up to 100,000 euros.
Aseesimees Arvo Aller
AI Summary
The Vice-Chairman asks Mr. Reinsalu to stop clicking his pen, as the noise is interfering with the microphone, and calls for attention to the presenter.
Rahandusminister Jürgen Ligi
AI Summary
The Ministry of Finance's draft bill sets the goal of ending the uncontrolled raising of funds by savings and loan associations, increasing depositor awareness and rights, and transitioning the security of cooperative financial activity through three phases. Following these phases, starting in 2029, only cooperatives operating in the form of a cooperative bank or as licensed banks will be permitted to raise deposits, while other cooperatives may only offer other services.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller thanked the rapporteur, informed the body that there were no questions, but noted that Toomas Uibo was unfortunately late and may submit questions based on the discussion held in the lead committee. He then asked Mart Võrklaev, as a member of both the lead committee and the Finance Committee, to take the floor.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Finance Committee discussed the draft legislation, the minister provided a comprehensive overview, and the committee reached a consensus on the following decisions: the bill will be placed on the plenary session agenda for September 10th, the first reading will be concluded, and Mart Võrklaev will be designated as the lead rapporteur.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller announces that we now have questions, and calls upon Peeter Ernits to respond.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits questions why the opinions of credit unions are simply noted, and why rigid capital requirements are in force (e.g., 1 million must be 5 million), while simultaneously emphasizing the need to maintain diversity and promote wealth in the financial and banking sector.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev emphasizes that credit unions were repeatedly consulted during the drafting of the bill, but the central union supervision model they proposed failed due to conflicts of interest and the resulting failure to protect depositors' money. Since credit unions (HLÜs) accept deposits from private individuals, advertising themselves as banks, yet unlike banks, they lack Guarantee Fund protection, many depositors (often pensioners) have lost their savings due to bankruptcies. Therefore, the unions must either stop accepting deposits or convert into banks under the supervision of the Financial Supervisory Authority by 2029 to ensure the protection of depositors' funds.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev explains that the central cooperative model is not functioning and depositors are unprotected. Therefore, credit unions must be transformed into banks within four years, meaning their activities will fall under the supervision of the Financial Supervisory Authority and their deposits will be protected.
Aseesimees Arvo Aller
AI Summary
Toomas Uibo is invited to the stage at the beginning of the address.
Toomas Uibo
Profiling Eesti 200 fraktsioonAI Summary
Toomas Uibo asked whether a couple dozen farmers could form a credit union to jointly purchase a combine harvester or lend money to one another without a public offering, and whether the historical role of savings and loan associations will remain or disappear.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev voiced concerns that, starting next year, credit unions will no longer be allowed to be established. Furthermore, even those that publicly solicit deposits fail to meet regulatory and guarantee requirements, and they are frequently used for real estate development and other high-risk lending, which could potentially cause losses for depositors.
Urve Tiidus
Profiling Eesti Reformierakonna fraktsioonAI Summary
Urve Tiidus refers to the Chancellor of Justice’s position that even long-standing and problem-free credit unions may cease to exist in their current form when complying with the new requirements, and requests a more precise forecast of how many of them will remain — two to three or about ten.
Aseesimees Arvo Aller
AI Summary
The presenter asks Urve Tiidus to come to the stage.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev stated that the law grants members of credit unions more rights to participate in decision-making and demand information, because some unions might transform themselves into banks, and in such a case, the protection of depositors' money and supervision is crucial.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller called upon Urmas Reinsalu to speak.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu asks Võrklaev whether the problems concerning the credit unions and the worries related to returning depositors' assets under current law stem from a supervisory failure, and whether the value of depositors' assets is guaranteed in the case of the restructuring set to conclude by 2029, as the boards of the unions promise.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev explained that the problem with credit unions stems from inadequate supervision, as they operate in a free market based on internal accountability and member activity. However, members often fail to grasp the risks or exercise sufficient control, leading to the realization of those risks. The proposed solution is to amend the law, which would allow these unions to continue operating as cooperative banks under the supervision of the Financial Supervisory Authority, with their deposits guaranteed by the Guarantee Fund.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev emphasizes that insufficient supervision of savings and loan associations creates risks because members are neither adequately informed nor involved, and decisions are often entrusted to only one or two members. Therefore, the law is being reformed so that these associations can continue operating as cooperative banks, whose supervision would be carried out by the Financial Supervision Authority, and whose deposits would be protected by the Guarantee Fund.
Aseesimees Arvo Aller
AI Summary
Deputy Speaker Arvo Aller recognizes Urmas Reinsalu.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu is asking the rapporteur for clarification regarding the background of the abolition of the supervision requirement for savings and loan associations in 2010, inquiring whether this constituted a government error, and demanding information on why liquidation is now being proposed instead of restoring less invasive supervision, all while emphasizing the need to ensure depositor confidence amidst an uncertain future forecast.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu asked whether the abolition of supervision in 2010 was a government mistake, and whether now, 15 years later, credit and savings associations must be liquidated due to the lack of oversight. He also asked whether the commission discussed less invasive ways to restore supervision, ensuring proper supervisory procedures, providing insurance for depositors, and how long this process might take.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev said that the regional requirements were changed in 2010, meaning credit unions no longer have to operate solely within one region. He apologized for any potential misstatement and added that supervisory activities weren't in place even before 2010 and should be reviewed, although he lacked specific data.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller invites Varro Vooglaid to take the floor.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid asks whether the commission has discussed that constitutional rights may only be restricted if a legal basis exists, and whether, to achieve the same objective—ensuring the security of deposits—less restrictive measures could be employed than prohibiting the activities of savings and loan associations, referencing § 31 of the Constitution and the protection afforded to business and association forms.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid emphasizes that constitutional rights may only be restricted if the same goal cannot be achieved through less intrusive measures. He then asks why the draft bill seeks to ban the activities of savings and loan associations when the safety of depositors could also be ensured by more effective supervision—a solution that would be less restrictive to the freedom of enterprise.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev emphasized that the objective of restructuring the activities of savings and loan associations is to protect depositors by subjecting deposit-taking associations to supervision and the protection of the Guarantee Fund. Simultaneously, it grants those that do not take deposits the opportunity to continue operating without having to become a bank. This is a balanced approach that does not force them to cease operations, but instead requires the reorganization of their activities within a reasonable timeframe, in accordance with the cooperative banking practices prevalent in other countries.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev said that the commission did not discuss the exact topic, but instead reviewed practices from other countries concerning deposit-taking in the form of a cooperative bank, as well as the supervision of credit unions and deposits guaranteed by the guarantee fund in Estonia. He emphasized that the goal is to find a balance between the rights of depositors and supervision, and that no one is being forced to cease operations, but rather they must restructure their activities over a reasonable and long-term period.
Aseesimees Arvo Aller
AI Summary
This address is merely a plea, directed at Varro Vooglaid.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid questions whether the same objective could be achieved through less restrictive measures thanks to more effective oversight, and whether the use of more invasive measures is actually unconstitutional.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev is pushing back against criticism concerning the balance point of the draft bill, explaining that a solution was reached following a lengthy process. This solution requires credit and savings associations that accept deposits to transform into a bank or a cooperative bank within three to four years, thereby ensuring depositor protection, supervision by the Financial Supervision Authority, and the guarantee of the Guarantee Fund.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev said that the bill's goal is to find a balance point, under which savings and loan associations (or credit unions), if they wish to attract deposits, can transform into banks or cooperative banks within three to four years, but deposits will remain protected, and the associations will be subject to the control of the Financial Supervision Authority, ensuring the rights of depositors and the protection of the Guarantee Fund.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller expresses his thanks, concludes the question period, and opens the floor for debate with the parliamentary groups. He notes that Varro Vooglaid has signed up to speak, asks if this was an error, and requests that he withdraw his name from the list. Helir-Valdor Seeder then takes the floor on behalf of the Isamaa faction.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
Helir-Valdor Seeder stated that he does not support the forced liquidation of credit unions, emphasizing the need to strengthen oversight and preserve their role in ensuring competition and providing affordable and flexible services.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
Helir-Valdor Seeder sharply criticizes the government's plan to essentially force the liquidation of savings and loan associations (HLÜs) by compelling them to restructure as banks, arguing that this is a disproportionate restriction on entrepreneurial freedom and reduces competition in the banking sector. He simultaneously stresses that HLÜs are important in regional life and offer more flexible services than banks, suggesting that, in order to solve existing problems, the focus should instead be on enhancing supervision rather than abolishing this form of business.
Aseesimees Arvo Aller
AI Summary
The message says three extra minutes are needed.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
The Isamaa parliamentary group cannot agree to the bill in its current form and therefore wishes to reject the first reading, urging the government to submit a new draft that focuses on the supervision and substantive problems of savings and loan associations, rather than their liquidation; concurrently, the speaker made two procedural remarks concerning the late arrival of those posing questions and the departure of ministers during the discussion, stressing the presiding officer's responsibility to ensure the culture and strictness of the debate.
Aseesimees Arvo Aller
AI Summary
Arvo Aller declared the discussions closed and put to a vote the Isamaa faction's proposal to reject Bill 671 on the first reading.
Aseesimees Arvo Aller
AI Summary
The proposal received 12 votes in favor, 41 against, and 0 abstentions; it did not receive support. The first reading is concluded, the deadline for submitting amendments is September 23rd at 5:15 PM, and we have completed the second item on the agenda, and the sitting is adjourned.