Credit unions pursue members for €37m

Credit union branches have secured over €37m in court judgments against loan defaulters in the past three years.

The community-based movement is continuing to rigorously pursue members who have not honoured loan agreements through the courts.

Legal actions were taken against 2,120 members between 2010 and 2012.

The figures were released by vision-net.ie which monitors the audited accounts of registered companies.

A spokesman for the Irish League of Credit Unions said that officials go through a rigorous process before resorting to court action, but that they have a duty of care to members with savings to recover lending.

Credit unions were set up as collectives of people that save together and lend to each other at an affordable rate of interest. Effectively, they are owned by their members and are run by volunteers.

An ILCU spokesman said: “It is important to note that credit unions use their members’ savings to issue loans to other members and, as such, the credit union must protect the interests of all its members.

“The credit union has a duty of care to try to recover all loans. In some unfortunate cases, particularly where the member doesn’t engage, the credit union is left with no other alternative than to institute legal action.”

The movement said it was unable to provide a figure on the percentage of money that was repaid following a court order.

It is accepted within the financial world that credit unions remain more successful than other institutions in recovering losses as they intervene earlier and, traditionally, have a higher level of customer loyalty than high street banks.

“Credit unions encourage members to contact them as early as possible if they are unable to repay a loan or if they are experiencing financial difficulties,” said the ILCU spokesman.

“A credit union, to the best of its ability and subject to legal requirements and restrictions, will try to accommodate members where possible and may be able to agree an alternative repayment plan.”

However, vision-net managing director Christine Cullen described the figures as the dark corner of Ireland’s credit crunch.

“The battle to have debts repaid shows no signs of relenting,” Ms Cullen said.

“Ireland’s credit binge during the Celtic Tiger is catching up with us, and it seems that taking the legal route to secure repayments is gaining traction.

“In 2010, credit union customers had 532 judgments worth €9,064,091 awarded against them. By the end of this year, that had soared to €14,330,412 across 785 judgments.”

The revelation comes just weeks after Finance Minister Michael Noonan published the Credit Union Bill, which will see the sector receive a €250m bailout.

Most credit unions are affiliated to the ILCU and are regulated by the Registrar of Credit Unions under the umbrella of the Central Bank of Ireland.

About 20 of the country’s larger credit unions are members of the Credit Union Development Association.