Credit Unions to push new government for more reforms

Credit Unions to push new government for more reforms
The Government is being urged to take a more proactive approach in supporting the work of Credit Unions in counties like Roscommon.

The main representative group for the credit union movement will, this week, issue the Government with a list of key reform demands it sees as being vital to strengthening the industry.

Greater capacity to provide mortgages and business loans and a review of the capital reserve requirements for individual unions will be on the agenda.

The Irish League of Credit Unions (ILCU) said constructive policies are needed in order to “safeguard” the long-term future of credit unions across the Republic.

The group will approach the new government on the back of a survey of its members, which shows a lowering in consumer borrowing appetites due to Covid-19. The ILCU said this, coupled with the capital reserve requirements for unions, will present challenges in the months ahead.

Its survey shows that the rescheduling of loans, the provision of bespoke banking services for older “cocooning” members, and express lodgement capability have been the three most in-demand services during the Covid-19 crisis.

Furthermore, more than 60% of credit unions have introduced payment holidays for borrowers, while 21% have been more flexible on underwriting.

The lack of borrowing appetite amongst members is cited as the single biggest challenge facing credit unions, according to the ILCU survey. More than 60% of unions are worried about operating costs and a decline in income, which could lead to viability concerns.

When credit union CEOs and managers were asked what measures were most important for the new government to introduce to underpin the long-term sustainability of the credit union movement, the most dominant responses were changes to the capital reserving structure required of credit unions and expanding the capacity of credit unions to provide a larger volume of home loans and business loans.

ILCU president Gerry Thompson said a new government provides the opportunity to work on safeguarding the long-term future of the credit union movement.

“In the coming days, the ILCU will publish a comprehensive policy document which sets out the key policy reform measures which the new Government must now introduce to ensure that credit unions, who have long provided a vital financial lifeline to families, communities and businesses, have the capacity to not only continue to do so but to become an even stronger force in community banking in Ireland,” Mr Thompson said.

The ILCU last week said the overall credit union movement remains strong and extremely well-capitalised in the wake of provisional liquidators being appointed to Dublin-based Drumcondra Credit Union after it repeatedly failed to meet its capital reserve requirements and failed in a merger that would have given it the necessary funding to survive.

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