New Credit Union regulations will stunt growth and tie hands of movement

Dublin South West TD Seán Crowe has said much of the new Credit Union regulation from the Central Bank will stunt growth and tie the hands of many Credit Union branches that want to expand and give people an alternative to traditional financial and Banking Institutions

Crowe said that on the critical issue like the cap of €100,000 in savings, the concerns of the Credit Unions and many others had been ignored. The Tallaght based representative was responding to the Central Bank’s press release stating that new stricter regulations were now in force.

Deputy Seán Crowe said:

“The Credit Union movement plays a unique social and economic role in Irish society that requires the ongoing support of government and the Central Bank. Despite the failure of the Irish banking system over the last number of years the Credit Union movement has, in very difficult circumstances, continued to provide an excellent and vital service to communities right across the country.

“Credit Unions are democratic and very well run. Only a tiny minority have had problems and these pale into insignificance when it comes to the fallout from the reckless actions of most Irish banks.

“The announcement of long awaited rules, especially the introduction of a €100,000 cap on savings, although with some flexibility is disappointing and represents a move by the Central Bank that is clearly without any rationale or public support.

“This clause is discriminatory and clearly puts credit unions at a disadvantage against other financial institutions. The €100,000 amount seems to be an arbitrary level and I can see no evidence of how this amount was arrived at.

“The regulatory action by the Central Bank combined with this latest legislation from Government, has failed to adequately respect the unique ethos of the Credit Union movement.

“We know that banking interests have applied pressure on Minister Noonan and the Department of Finance, and it’s no surprise that they have folded in their demands.

“When the Registrar was before the Oireachtas Finance Committee recently to discuss these regulations she failed to give any credible rationale or reason why they were necessary. It seems when it comes to the Credit Union movement all the normal rules of regulation such as risk weighted regulation are thrown out the window as an ever tightening grip is applied.

“The Central Bank has crossed the line into overly restrictive rules that are designed to control rather than to ensure growth and will inevitably tie the hands of the Credit Union Movement.

“Overall, these new regulations will confirm the fear of the Credit Union movement that the Central Bank backed by this Government are not serious about promoting the work and ethos of the movement. The regulations are lacking evidence as to why they are appropriate, lacking public and stakeholder support which is hardly surprising given that the consultation process largely seems to have been window dressing exercise.

“Credit Unions are in many cases the only legitimate institution or place that people on low and middle incomes can access a loan.

“People trust their local Credit Union, while they do not always trust commercial banks. Surely people should be free to place whatever savings they want in a secure account in their local Credit Union, rather than with a bank they may not trust.”