Credit where credit is long due

As a volunteer director on the board of my credit union for 12 years, I am responding to Mary Shanahan (Letters, Oct 4) who wrote of a Credit Union system that has lost its values. I’d like to reassure Mary that the reality is different.

A volunteer-led, member-driven, not-for-profit co-operative rooted in the local community, as pioneered by Nora Herlihy, and others, in the 1950s, is still the ideal of credit unions. This is borne out by the trust that members have in their credit unions, despite the worst global financial crash in recent history. Credit unions were the last port of call for people who couldn’t get credit from the banks. Today, they have become the only port of call in communities that have been abandoned by the banks, which made vast profits from those communities.

Unfortunately, a small number of credit unions were swept along in the fervour of the Celtic Tiger’s roar and suffered large financial losses.

Other credit unions, through no fault of their own, suffered investment losses following the collapse of the banking system, and loan losses because of the changed circumstances of many members, who lost their jobs and are reeling from austerity.

Prudent fiscal policies during the boom, mean that credit unions have capital reserves in excess of those required by the Central Bank and are well-provisioned to deal with impaired debt.

These provisions, coupled with funds in the Savings Protection Scheme owned by Credit Unions affiliated to the Irish League of Credit Unions, mean that credit unions have managed their losses without having to resort to the taxpayer. This is in sharp contrast to other financial entities that have crippled this country.

Credit unions are heavily regulated by the Central Bank, but the ethos of putting the member first is a far stronger regulatory force, and ensures that proper procedures are in place to assess the granting of loans that protect the members’ savings.

Value-added products, such as free loan protection and life-savings insurance, give credit-union members another layer of protection and security.

New legislation means that credit unions will face major change in the short- to medium-term, probably the biggest upheaval in their history. I’d like to invite Mary, and others with something to offer, to volunteer for their local credit union and be part of that change.

Together, we can ensure that the ethos of the movement is preserved for the benefit of everyone.

Mick Long

Killarney

Co Kerry