Members of one of Cork’s biggest credit unions are set for an unexpected windfall from a former death benefit insurance (DBI) scheme it had to close.
Gurranabraher Credit Union will announce details on Tuesday of a plan to repay contributions, totalling some €2.5m, made by its estimated 15,000 members into the DBI scheme it operated between 2003 and 2019, when a law change forced the scheme to cease.
The credit union’s directors said they had decided to return all member contributions on an ex-gratia basis, with payments to be made directly into member accounts from Wednesday. The repayments will be worth several hundred euro to each member.
Chairman of the board of directors Eamonn Kirwan said they were aware of members’ disappointment when the scheme was discontinued in 2019.
“We have been discussing this in great detail for some time,” he said.
“Given the disappointment felt by members, we have decided to repay the premiums.
“We have strong reserves and this is a prudent thing to do. We can manage this comfortably.”
DBI is a unique service offered by some credit unions to eligible members.
The schemes, which varied from credit union to credit union, saw members agree at their AGMs the annual premium rate they would pay, and the fixed lump-sum payment to be paid out to next of kin in the event of their death.
The money, which could in cases top €3,000, was often used to help cover funeral expenses or to leave as a legacy.
But in 2018, the government enacted the European Payment Services Directive 2, which required any financial institution which took a premium from its members for a service to get individual written consent from those members.
The Gurranabraher DBI scheme was a 100% membership scheme and when it became clear that the written agreement of all could not be secured, the DBI scheme had to be discontinued.
“Some members may have wanted the scheme to continue, however, the change in regulations meant there was no feasible way to do that,” Mr Kirwan said.
He said they have been liaising with the Central Bank of Ireland since on how to address the issue and have now decided to repay the contributions to the members.
Mr Kirwan pointed out that other significant benefits relating to the death of a member are still in place, including the traditional Life Savings Assurance scheme, which sees the credit union double a members’ savings on their death, and the Loan Protection Insurance scheme, which means the loan dies with the member.
The repayment will take place automatically from Wednesday, March 3, and will equate to the number of deductions made from members’ accounts from 2005 and to 2018.
The credit union will operate a dedicated support phone line for statement requests on 021-430 3394 from 9.30am to 5pm each week day.