New law will allow credit unions compete with banks

If the law is passed, more members of credit unions will be able to access mortgages, business loans, and current accounts

Minister of State Jennifer Carroll MacNeill. The Credit Union (Amendment) Bill 2022 proposes allowing credit unions that do not offer services such as mortgages to refer members to credit unions that do. File picture: Moya Nolan

All credit union members will be able to access mortgages, business loans, and current accounts under a significant expansion of the sector.

The Government hopes to pass legislation by the end of the year allowing greater collaboration between credit unions to achieve economies of scale. 

The law will also allow smaller credit unions that do not provide services such as mortgages or SME loans to refer members to branches that do.

Minister of State Jennifer Carroll MacNeill said she wants to help credit unions expand and adapt to compete with both the pillar banks and new online offerings, but at the same time retain the organisation’s community focus. She said: 

I believe all credit union members, irrespective of where they live, should have access to the full services of community banking. 

“All members should, for example, be able to open a credit union current account, apply for a business loan and should be able to access a mortgage product.”

“That is not happening at present and the bill will help the credit union movement to meet this objective if they so wish.”

The Credit Union (Amendment) Bill 2022, which has now passed committee stage, includes two key amendments. The first will allow credit unions to take part in both loan participation and loan syndication. It will also allow credit unions to refer members to other branches in all circumstances.

“We’re trying to create something really that isn’t a bank, that really isn’t a fintech, but that is the best of what we’ve had and enable them to move into this new space in a really long-term sustainable way,” Ms Carroll MacNeill said.

It is hoped the changes will allow credit unions to dramatically expand their reach into the mortgage market.

A number of credit unions have already started to offer mortgages to customers, however, they still only account for 7% of the total mortgage market.