Credit unions challenge directions

A phased review of the assets of credit unions was initiated two years ago due to concerns about the future stability of the credit union sector, a court has heard.

Mark Forde, a senior regulator in the Registry of Credit Unions, told the High Court Maynooth Credit Union was among a number of credit unions selected in 2012 for review because of “serious concerns” about its position. It was anticipated 150 credit unions will be reviewed by the end of this year, he said.

He denied Maynooth’s claim the issuing of regulatory directions to it in April and July 2013, arising from the review carried out by consultancy firm Deloitte, amounted to discrimination or failed to take into account its position as a community credit union.

He also rejected claims the Deloitte report concerning Maynooth was “self-contradictory” and “irrational” or had used a flawed methodology.

There was nothing in a report prepared by another accountancy firm engaged by Maynooth which altered the regulator’s view of the Deloitte report and its findings, he added.

Maynooth was also given “significant” opportunities to consider and respond to the Deloitte report before the first direction issued.

The directions, including a requirement to have €1.25m reserves, were expedient in the interest of the orderly and proper regulation of Maynooth Credit Union’s business and to protect the savings of its members, he said. They arose where Maynooth’s reserves were considerably below the 10% regulatory reserve ratio and where funding secured by it from the Irish League of Credit Union’s Savings Protection Scheme would increase that regulatory reserve ratio to 3.4%, not the 10% stipulated.

An affidavit from Mr Forde was among documents read yesterday in the continuing hearing of the challenge by Maynooth Credit Union and the Irish League of Credit Unions to the directions issued by the Registry of Credit Unions to Maynooth and four other credit unions arising from the reviews.

As a result of the reviews, all five were issued with directions requiring them to secure additional solvency support in specific sums to meet the 10% regulatory reserve ratio, introduced in 2009. Failure to comply with such directions is a criminal offence under the Credit Union Act.