Carrigaline TD wants to support Credit Unions

23 June 2015
By David O’Sullivan
david@TheCork.ie

michaelmcgrath

Fianna Fáil Finance Spokesperson Michael McGrath has called for a concerted policy initiative on behalf of the State to ensure the full potential of the credit union sector in Ireland is realised.

McGrath is based in Carrigaline and was speaking ahead of a Fianna Fáil Private Members motion in the Dáil today, which will highlight the manner in which credit unions are being “stifled” by lending restrictions and unfair competition from the banks.

Deputy McGrath commented,

“The credit union sector has a proud tradition in communities throughout the country. With expert local knowledge and strong personal relationships, credit unions are able to make sound judgments about lending to individual customers, small businesses, the self-employed and farmers. The sector has survived the crisis well, with just 1% of credit unions needing state funding support since the financial crisis began. The not for profit and independent nature of credit unions is vital to the success of the sector.

“However the reality is that the sector is effectively stagnant, with the amount of its funds out on loan declining year after year. The sector can only make money if it is able to issue new loans. In too many instances, the ability of credit unions to do just that is being unnecessarily constrained.

“Credit unions have massively improved their regulatory framework in recent years with professionally qualified people among its employed and voluntary staff. The sector has improved its overall reserve ratio without resorting to the type of tactics employed by commercial banks who raised interest rates and charges at the expense of their existing customers.

“We have a concern that various legislative and regulatory provisions, collectively, threaten the viability of credit unions as they very much allude to maintaining an ‘as is’ format which undermines the ability of the sector to innovate and expand. These include restrictions on the length of time for which a loan can be issued, the maximum amount a credit union member can have on deposit and the approval process for new products such as debit cards.”

The Fianna Fáil Dáil motion will set out a number of key initiatives aimed at bringing new vibrancy to the sector:

· A review of Section 35 legislation relating to restrictions on rescheduled loans and term limits on lending;
· A streamlining of the process for the approval of additional services;
· A financial impact analysis to be conducted on the extent of losses incurred by credit unions arising from the Personal Insolvency legislation;
· An examination of the Personal Insolvency Act by the Competition and Consumer Protection Commission;
· The Central Bank in its Consumer protection role to engage directly with Credit Unions to establish the impact the current legislative and regulatory restrictions are having on communities.
· The Minister for Finance to bring forward a white paper on the role of the Credit Union sector within the broader financial services sector in Ireland;
· The establishment of an industry-led forum with representation from all stakeholders that examines the future growth potential of credit unions in Ireland.

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Checkout local Newspaper – The Carrigdhoun – http://carrigdhoun.com/

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