Credit unions should be “empowered” in order help fix the housing crisis and the Government should change the law to make that happen, the Oireachtas finance committee is to recommend.
A draft copy of its report, obtained by the Irish Examiner, recommends a new tiered approach to oversight and control of credit unions based on their size.
However, it is a recommendation, proposed by committee members, that the credit union sector should be unleashed to help the housing crisis, which stands out.
The 42-page report states: “That the credit union movement should be empowered to contribute to alleviating the housing crisis in the State and the current regulations are not adequate to this imperative.”
The committee is urging that consideration be given to the feasibility of enabling credit unions to utilise their finances to lend collectively to approved housing bodies to address the current housing crisis.
According to the report, the committee is of the opinion that the sector faces significant challenges and requires renewed vigour or it will become irrelevant.
“The time to act is now,” says the report. “The sector has substantial assets, the goal is to grow and develop the movement in line with wider socio-economic transformation.”
Brian McCrory, president of the Irish League of Credit Unions, said: “Credit unions are a vibrant, innovative movement that do a lot now, but critically are positioned to do a lot more for communities and our country.
“But there is a mismatch between our capacity, and willingness on one hand and the willingness and capacity of those with policy and regulatory responsibility to partner with us.”
The report states that, throughout the committee hearings, much of the discussion centred on what was labelled an “expectations gap” between what the movement deems is possible and what the registrar considers is realistic or more appropriate.
This committee believesthat a balance can be struck between both perspectives, says the report.
“The committee is acutely aware of the necessity to safeguard members’ funds and to generally protect wider financial stability,” it says. “However, the evidence presented to the committee dispels the contention that credit unions pose a serious risk to the stability of the financial sector. The net cost to the State arising from credit unions emerging from the financial crisis is circa €5m.”
The report also requests that a new appeals mechanism be introduced which will allow credit unions to appeal all regulatory-related decisions made by the Central Bank to an independent body.
It also wants an alternative disputes resolution mechanism to be made available to deal with unresolved disagreements between individual credit unions or groups of credit unions and the Central Bank.
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