Ireland is tops for Credit Unions

IRISH credit unions have the highest proportion of savers and borrowers of any credit union movement in the world, it emerged last night.

Around 40% of Irish savers have credit union accounts and 54% of borrowers obtain finance through their credit union.

The Irish League of Credit Unions (ILCU) said this indicated the success of the credit union movement since it was founded in Dublin Castle in 1964 by 13 members of the gardai.

“It shows an extraordinary penetration rate. In fact, it’s the highest penetration rate of any credit union in the world and there are over 70 such movements,” said chief executive Liam O’Dwyer.

The ILCU’s 2004 annual report published yesterday showed there were 2.9 million credit union members.

The value of savings rose by 15% to around €11 billion and the value of loans rose by 9.5% to €5.6 billion.

Mr O’Dwyer said credit unions were making loans ranging from €200 to €500,000, with the average amount around €5,000.

“They have managed to straddle all aspects of Irish society and that is equally important. The reason we’ve done so well is that we’re perceived as a social co-operative and not for profit.”

Around 9,500 volunteers run the movement with the help of 1,600 full time staff and 1,200 part time staff.

However, Mr O’Dwyer warned that while credit unions were restricted by law in what they could lend, other financial institutions were encouraging consumers to take up chequebook mortgages

“On the face of it, it seems great because your monthly repayments are cut but you are paying for disposable items over a much longer period of time, and in fact you’re ultimately paying more. They are so concerned in England that the Financial Services Authority are undertaking an investigation into that type of credit.”

He said the ILCU wanted the Irish Financial Services Regulatory Authority (IFSRA) to do the same.

Taoiseach Bertie Ahern, who launched the report at the St Raphael’s credit union in his Dublin Central constituency, said he shared the ICLU’s concern.

“I believe financial institutions should exercise caution about over-aggressively promoting mortgage-based long term lending for short term purposes,” he said.

The savings of credit union members are safeguarded by a Savings Protection Scheme worth €85 million.

The movement also has internal auditors to check individual branches for any signs of impropriety.