CUs in home loans plea

By Eamon Quinn

Credit unions have again urged regulators to allow them compete in the Irish mortgage market “in a meaningful way” after the Central Bank launched a further consultation to ensure they are fully aware of the risks.

“The ILCU (Irish League of Credit Unions) today notes the publication by the Central Bank of Ireland of this consultation paper. The ILCU, on behalf of its affiliated credit unions, has long campaigned for a review of the restrictive, long-term lending limits imposed on the credit union movement — and so welcomes this move by the Central Bank,” said its chief executive Ed Farrell.

Mr Farrell said that offering mortgages “in a meaningful way” would benefit credit unions as well as borrowers by helping to heighten competition to the homes loans market.

“We have been keenly aware of the need to expand our reach in the residential mortgage market in order to ensure credit union members, and consumers in general, are benefitting from real competition and diversity. We can only become significant players in the mortgage market with an amendment to the current lending limits,” he said.

Regulators are keenly aware of the risks of authorising credit unions to expand their operations. Central Bank deputy governor Ed Sibley said this week management standards had improved but “further progress” was required in areas including risk management and governance.

At the same time, advocates point out that the handful of Irish banks charge borrowers the highest mortgage rates in the eurozone.

The Central Bank said that launching its “Consultation on Potential Changes to the Lending Framework for Credit Unions” as well as a “Regulatory Impact Analysis” was “to ensure the protection by each credit union of the funds of its members and maintenance of the financial stability and well-being of credit unions generally”.

It said: “The new proposals have been informed by engagement with industry stakeholders and an examination of the current regulatory framework and recent lending trends.” Its consultation runs to early January.