A senior official in the financial watchdog today called for increased regulation of credit unions.
James O’Brien, deputy registrar of credit unions with the Financial Regulator, said tighter controls were needed to protect members’ savings.
It is understood at least one in 10 of the country’s 410 credit unions were facing warnings this year about lending and investment practices.
Mr O’Brien told the Credit Union Managers’ Association autumn conference in Athlone they must not return to high risk/high return policies of recent years.
“Significant losses on commercial type lending will also, leave a scar,” he warned.
“However, in order to ensure the continued protection of members’ savings, the current regulatory regime... must be enhanced, especially in the areas of governance and controls.”
Mr O’Brien said he wanted regulation to match the level of risks being taken.
“Rather than fear such developments we are of the view that the new financial landscape could offer opportunities for credit unions,” he added.
Credit unions are to file returns with the Regulator at the end of the month. The accounts are expected to show tens of millions of debts and written off loans.
However, Mr O’Brien insisted there was no reason why the group cannot survive the credit crunch.
“It is rightly pointed out that credit unions have survived difficult economic times in the past and I would expect the same will be the case this time,” he said.
“The sector is resilient.”
Mr O’Brien noted a report by consultants Amarach that confirmed people continue to trust credit unions when public confidence in financial institutions is at an all-time low.