THE main representative body for Ireland’s credit union movement has called for an independent regulator for the sector, warning that the proposed reform of the financial regulatory system could damage their business.
Addressing the Joint Oireachtas Committee on Economic Regulatory Affairs, yesterday, Irish League of Credit Unions (ILCU) president Mark Bailey said that a “one size fits all” approach to regulation would not be fair to the movement.
“Our primary concern around the new regulatory structure is that the proposed reforms will directly impact on credit unions, given that we are regulated within the current financial regulatory structure,” Mr Bailey said.
“We’re also deeply concerned that, in the redesign of regulation for financial institutions – which currently includes credit unions – new structures would be put in place to address the worst excesses of banking in Ireland, which could have an adverse effect on credit unions. Despite an extremely tough climate last year, with major challenges for individual credit unions and their members, credit unions remain robust, stable and prudentially sound,” he added, before pointing out that no single credit union in the country is insolvent.
Mr Bailey said that Ireland should follow the system operational in the US; where credit unions are regulated separately from banks – adding that it would allow the Financial Regulator “to concentrate on regulating the activities and behaviour of those who have presented problems”.
“In seeking this, we aren’t looking for less regulation but for regulation to take place on a basis which recognises the difference between banks, building societies and credit unions.”
The ILCU representatives said they want the new Credit Union Regulator to come under the Department of Enterprise, Trade and Employment rather than the Department of Finance.
Although some support was hinted at by Committee members, the ILCU party was asked why stringent incoming regulation shouldn’t suffice for credit unions as well as the banks.
In reply, they said that as they were different to banks they merit different regulation and added they “do not wish to be associated with an exercise designed to repair what went wrong with the banking system”.
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