Warning over future of North's credit unions

Credit unions in the North could close if fresh regulation is introduced, it was warned today.

With some of the community-based groups pressing for greater responsibilities like providing insurance services, Financial Services Authority (FSA) oversight is one potential option.

Stormont’s Enterprise, Trade and Investment (DETI) Committee is considering whether to recommend a greater role for the FSA in exchange for more powers.

Ulster Federation of Credit Unions spokeswoman Gladys Copeland told the committee: “We had a great deal of difficulty in getting people to join, if we start acting like a bank they won’t want to know.

“We are volunteers, if all this extra work is going to be brought on to us, if the Financial Services Authority (FSA) is regulating us, I want to know exactly what that will entail.

“If we go into the FSA it is going to be a lot different, we will lose volunteers then we will not be able to help people so the credit unions will close.”

House insurance and car insurance are areas of additional responsibility which the organisations could consider, the Federation added.

There would need to be more training for staff, and the move could be “fraught” with danger, it warned.

Ms Copeland explained: “It is getting away from the roots of the community. If we start getting too big and having all these extra things we as credit unions are going to lose a lot of members.”

DETI Committee chairman Mark Durkan said members faced a number of conflicting views in drafting their report.

“We have to be careful we don’t impose on those who are content with where they are and in ways that are manageable in terms of the FSA’s very clear locus on all of this.”

The Irish League of Credit Unions is pressing for a string of extra services to be allocated.

These include insurance, pension saving and child trust funds.

The League said: “Member credit unions in Northern Ireland have been denied authorisation to offer Child Trust Funds.

“This is hugely disappointing since the League is committed to the idea that an integral part of the process of financial education is communicating with people from an early age.

“Credit unions by their very nature and ethos make them a significantly less intimidating and in turn more appropriate vehicle for any person’s introduction to the world of financial services.”

The Treasury has agreed to undertake a review of regulation of credit unions and industrial and provident societies in the North.

They are currently regulated by the Department for Enterprise, Trade and Investment.