Row over call for new credit union regulator

THE Credit Union Managers’ Association (CUMA) has voiced its disagreement with the main representative body’s call for a new independent regulator for the credit union movement in Ireland.

While the Irish League of Credit Unions (ILCU) recently told the Joint Oireachtas Committee on Economic Regulatory Affairs that a “one size fits all” approach to regulation wouldn’t be fair to the movement and an independent regulator was needed; CUMA – which represents more than 230 credit union managers – yesterday told the same Dáil Committee that the supervision of credit unions should remain a responsibility of the Financial Regulator.

““We contend, however, that the registrar’s position and function is significantly separate and independent from the regulation of commercial, profit-driven financial institutions,” CUMA’s chairperson, Selina Gilleece told the committee.

The ILCU’s previous argument focused on the potential damaging effect on credit unions by the planned, mainly bank-focused, reform of the financial regulatory system.

While CUMA has also expressed concern over a “one size fits all” approach, its main problem with the ILCU’s outlook is that – while it, too, feels that the regulatory concerns of credit unions are different – it wants regulation to still fall under the control of the Department of Finance. The ILCU has called for regulatory responsibility to be ultimately shifted to the Department of Enterprise, Trade and Employment.

CUMA also used its time in the Dáil to call for an amendment to Section 35 of the 1997 Credit Union Act, which basically restricts unions to lending no more than 20% of their loan book for more than five years. Ms Gilleece said that the rise in unemployment has made this issue more important.

“In practical terms, if my credit union currently has 20% of its loan book out over five years, I cannot sit down with a member who has lost his or her job – or has experienced a reduction in pay – and work out a new repayment schedule with a reduced payment over a longer period of time. Effectively, Section 35 ties my hands behind my back,” she added.