Credit union league may face insurance legal fight
Up to now, credit unions have had to take out assurance for account holders’ savings and loans from ECCU, the ILCU’s life assurance company, or risk disaffiliation from the league.
However, following complaints from individual credit unions, the Competition Authority has decided the ILCU/ECCU arrangement for purchasing loan protection and life savings cover is anti-competitive.
“If they continue to operate this arrangement, it is open to us to take them to court,” said Competition Authority spokesman, Ciarán Quigley.
The ILCU, in its accounts for this year, projected a 9 million injection into the league’s funds courtesy of the arrangement with ECCU. The money is generated by loading the insurance premiums paid by credit unions to ECCU and passing the resulting income on to the ILCU.
David P Barry, treasurer of Bishopstown Credit Union in Cork, said ECCU had in the past loaded premiums by up to 30% to fund the operation of the ILCU.
Mr Barry said when Bishopstown opted to go into the marketplace to source cheaper assurance for loan protection and life savings, they could have made savings of more than 114,280 over a two-year period.
However, they were threatened with disaffiliation by the ILCU and members voted to stay in the movement.
Bishopstown and 20 other credit unions have now joined the Credit Union Development Association (CUDA), a pressure group seeking ILCU reforms, and 13 CUDA members are sourcing independent loan protection and life savings assurance.
Last week the Competition Authority revoked a certificate, granted to the league in 1995, which certified that the ILCU rules were not anti-competitive.
A statement from the ILCU denied the certificate had been revoked because of anti-competitive practices, arguing that all such certificates were revoked from July 2, as the Competition Act 2002 commenced on that date.
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