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dawn.kennedy@cuda.ie

CUDA welcomes budget increases for home retrofit grants, but incentivising homeowners to use a combination of grants, loans and savings could be key to success of retrofits

By | News

500,000 home retrofit target will not be reached unless the costs are affordable for average households, increases for SEAI grant schemes announced in todays budget are a very positive development but incentivising the use of surplus household savings may be an important piece of the puzzle

·         Credit Unions are best placed to become primary source of finance for nationwide retrofit project

·         A Government commitment for community schemes throughout Ireland will create thousands of jobs & reduce fuel poverty in households

The Credit Union Development Association [CUDA], that currently runs Ireland’s first end-to-end home retrofit scheme – ProEnergy Homes, has welcomed today’s budget announcement of an additional funding for SEAI grant schemes and the acknowledgement by Minister Eamon Ryan that this will be delivered primarily through community organisations like credit unions. This announcement is a major achievement for the SEAI and allows them to build on the work they have been doing over many years.

In 2019, 25 Credit Unions nationally piloted the ProEnergy Homes scheme. Under this approach, a national project management firm (REIL) was appointed to oversee all surveys and works, grant funding of 35% was available from SEAI for all qualifying works and low rate financing was made available for the balance of costs through the applicant’s local credit union.  CUDA reported at the time that public demand for the scheme was enormous, demonstrating people’s appetite for a ‘one-stop-shop’ model.

Following a review of the pilot scheme, CUDA determined that while the public demand for this model is high, in order to meet the Government’s target to retrofit 500,000 homes and bring them to a B2 energy rating by 2030, analysing the affordability of retrofit projects for the average household will be vital.  CUDA say in their experience of running ProEnergy Homes, the average costs per household run to approximately €30,000 – €40,000 to bring homes to B2 energy rating. The most popular measures undertaken in 2019 were external wall insulation, new glazing. Multi zone boiler controls also proved very popular.

SEAI grants will fund a generous 35% of the costs, but many homeowners will still be left with a bill of roughly €26,000 for their retrofit. While many credit unions will offer preferential finance rates for home retrofits (around 6.9% unsecured or 4.9% when backed by shares); financing retrofits over 5 years will see repayments of around €500 per month, which is still out of reach for many middle-income families.

One possible solution could be to incentivise homeowners to use some of their savings to lower the costs of financing the works. Central Bank data shows that Irish households have saved an additional €10bn this year alone with household savings now standing at record levels. Encouraging homeowners to use some of their savings, say by toping up any savings used in a fashion similar to the Help to Buy Scheme, would make home retrofits much more accessible for the average family.

For example, with costs of €40,000 to get a home to a B2 rating, grants will cover €14,000 leaving €26,000 to be covered by the homeowner. If they have managed to build up some additional savings that they can use, say €10,000 and were incentivised to use these with a 10% or €1,000 top up, the amount to be financed falls to €15,000. Financing this over 5 years would see monthly repayments of around €295 which is very typical of average home improvement loan repayments for Irish households.

Using some of the savings they have built up would allow a homeowner not only to retrofit their home and take advantage of all the benefits that brings in terms of ongoing savings for home heating, home comfort and health, but would also significantly reduce the cost of credit for the portion of the costs being financed. Making retrofits more affordable and accessible for middle income families also brings major benefits for the broader economy as greater uptake of energy retrofits has the potential to create thousands of jobs over the coming decade.

While the cross-Departmental Retrofit Taskforce will develop a new long-term national retrofit delivery model, CUDA believes that several measures should be put in place immediately and have communicated these to Minister for Communications, Climate Action and Environment Eamon Ryan.

  1. Homeowners should be encouraged to use some of their savings toward the project rather than having to rely solely on credit.
  2. No group is better positioned than credit unions to support retrofitting plans in local communities across Ireland.
  3. There is a pressing need to develop a training programme for local tradespeople across the country so that more local workers would be able to carry on the necessary home improvements to the required standards for homeowners availing of schemes.
  4. The government should continue to fully support multi-annual grant budgets for the SEAI so that retrofitting schemes can operate unencumbered year-round.

Kevin Johnson, CEO of CUDA explained their position

While we are hugely supportive of the Minister in relation to the massive undertaking of retrofitting 500 thousand homes and commend the important announcement in the budget today, we believe that certain simple changes are necessary if the target is to be achieved. We have been engaging with the Minister in relation to these issues as we truly believe that the expansion of the ProEnergy Homes scheme will boost local communities at their time of need and have tangible and meaningful socio-economic benefits. Recent reports suggest retrofitting homes to bring them to a B2 energy rating standard or above, could significantly reduce fuel poverty*. It could also see the creation of 1000s of construction sector jobs if run efficiently and taken up on a large scale.

As the trusted provider of financial services in communities throughout Ireland, credit unions are uniquely positioned to support the delivery of a one-stop-shop model for home energy retrofits. We understand that for many households the past few months have been incredibly difficult and will unfortunately remain difficult for some time. However, some households have been in a fortunate position to build up savings this year and this is borne out in record savings inflows to credit unions since March. At a time when the interest rates and dividends available on these savings will be at or near zero, investing in a home retrofit could make a lot of sense. Combining some savings with a low rate loan will make the monthly repayments very affordable and there are many benefits; lower heating bills, a more comfortable home and the opportunity to support local tradespeople.

The announcement of the [Training\apprenticeship Programme] is an incredibly important initiative so that local tradespeople can be upskilled to complete works to the higher standards expected when retrofitting a residential house to B2 rating. As community organisations, credit unions are anxious to support local tradespeople, but too few have been trained to the standards expected on deep retrofits. Upskilling existing tradespeople nationally would allow for the creation of panels across the country that will support local economies while ensuring competition keeps prices and exchequer funding to a minimum.

Ends

*

Fuel Poverty is described as spending at least 10% of a household income on keeping a home warm

CUDA Welcomes Reduction in Levies

By | News

CUDA welcomes the announcement by the Minister for Finance of reductions in the 2021 levies for both the Credit Institution Resolution Levy [down c6%] and the Credit Union Stabilisation Levy [down c90%].  In particular, we appreciate Minister Donohoe’s decision to heed our concerns in relation to the Stabilisation Fund levy.

While CUDA continues to support the purpose of a Stabilisation Fund, as it currently stands it has yet to be claimed against as it is both difficult and costly to access.  CUDA did propose that the target size of the Fund should now be regarded as succeeded and therefore the levy be set at 0%, and we requested the Minister to carry out a review of the Scheme to see how it might be improved.

We look forward to its criteria and status being included in the upcoming Review of the Policy Framework for Credit Unions under the Programme for Government.

CUDA Partners with Initiative Ireland to Launch New Housing Fund Backed by Irish Credit Unions

By | News

Dublin, Ireland, 30 August 2020, Minister for Housing, Local Government and Heritage, Darragh O’Brien TD, today welcomed the announcement by Initiative Ireland and CUDA, the Credit Union Development Agency, of their plan to launch a new social and affordable housing fund supported by the Credit Unions of Ireland.   

Expected to launch later this year, the new fund will enable Credit Unions from across Ireland to avail of recent regulatory changes which empower the Credit Unions to lend to Approved Housing Bodies (AHBs) through a regulated fund.

Initiative Ireland, which specialises in funding social and affordable housing developments nationwide, will act as an Investment Advisor to the fund, sourcing and managing projects with Approved Housing Bodies.

CUDA with membership of over 50 credit unions nationwide, which manage over €7 billion in assets, will lead engagement with member credit unions as a sub-adviser, with the expectation that the fund will deploy over €300 million per annum on behalf of Credit Unions to deliver over 1,000 new homes per annum.

Minister Darragh O’Brien TD said, “I would like to commend the partnership between Initiative Ireland and the Credit Union Development Association which will see the creation of social and affordable homes by our AHBs. This strategy has significant potential to make a real impact to Credit Unions, Approved Housing Bodies and ultimately the lives of people across the country.”

Kevin Johnson, CEO, CUDA said, “Through this new fund our members will play a key role in supporting an increase in supply of much-needed housing nationwide. The fund will provide competitive finance to Approved Housing Bodies which play a key role in the delivery of social housing today. As not-for-profit enterprises, they purchase and commission new social housing for long-term lease back to local county councils.”

“This activity is vital in promoting and enabling the construction of social housing nationwide. We hope to offer an ongoing sustainable and affordable source of funding for Housing Bodies and in turn credit unions will have the opportunity to deploy their members savings into a conservative, sustainably managed strategy.”

Padraig W. Rushe, CEO, Initiative Ireland said, “As a social impact finance specialist, we are committed to strategies that deliver clear societal and environmental impact and promote financial inclusion. Over the last five years, we’ve worked with our impact investor community to deliver social and affordable housing projects across the country. Our partnership with CUDA is the logical next step, as we look to increase the scale of that impact.” 

Initiative Ireland, headquartered at NovaUCD and supported by Enterprise Ireland, was founded in 2015 with the goal of providing increased financial inclusion, competition, and sustainability to the Irish Finance Market.

To date the firm has provided finance to developers and approved housing bodies in support of smaller scale projects, financed by their peer-to-peer impact investor community comprising of Funds, Corporates, Pensions and Private Investors.

All loans are secured with a first legal charge over the properties and loans are managed from end-to-end by Initiative Ireland as the loan agent. This new strategy will increase the scale of lending they will be able to offer, specifically aiding the expansion strategies of Tier 3 Approved Housing Bodies nationwide.

Sinead Byrne, COO, Initiative Ireland said, “As a values-based finance company, we’re committed to providing honest, fair and inclusive finance to deliver social good and fair returns. We’re delighted to announce our partnership with CUDA and Irish Credit Unions which were also founded on those principles and we look forward to building on that relationship over the coming years.” 

LTR Kevin Johnson (CEO of CUDA), Minister Darragh O’Brien TD, Sinead Byrne (COO of Initiative Ireland) and Padraig W. Rushe (CEO of Initiative Ireland).

CUDA welcomes new Minister for State with specific Credit Union responsibility

By | News

Credit Unions contact the new Minister offering support for rebuilding the economy at local and national level

Credit unions have warmly welcomed the appointment of Seán Fleming TD as Minister of State at the Department of Finance with responsibility for Financial Services, Credit Unions and Insurance.

Commenting on the appointment, Kevin Johnson, CEO of CUDA,

We welcome the appointment of Minister Fleming and as he works through the extremely difficult challenges in his role, we believe that credit unions can play a vital role in supporting him and his Government colleagues with the rebuilding of Ireland’s economy. We have an increased range of lending products – consumer loans now complimented with home loans and business loans, and we look forward to working with Minister Fleming to further broaden the financial support that credit unions can offer members and their local communities.

We have written to Minister Fleming to share with him how credit unions can support him in achieving aspects of the Programme for Government and contribute to rebuilding the economy, both at local and national level”.

CUDA welcomes first Minister with specific Credit Union responsibility

By | News, Representation

Credit Unions hopeful that the Minister can support the ongoing expansion of services to members and local communities

Credit unions have warmly welcomed the appointment of Jack Chambers TD as Minister of State for Financial Services, Credit Unions and Insurance which represents a significant step as it’s the first time that any Minister will have specific responsibility for the development of credit unions. According to CUDA (The Credit Union Development Association), Ireland’s Credit Unions have in excess of 3 million members and are the sole provider of credit for many of these members, accounting for approximately 34% of the consumer lending market.

Commenting on the appointment, Kevin Johnson, CEO of CUDA, said “We welcome the appointment of Minister Chambers and are committed to supporting him in his new role. Credit unions continue to excel at consumer lending, and are in far better shape to support members than was the case during the banking crisis. We have solid financials, with average capital of 16.5%, stronger governance, great digital capabilities and a reputation as Ireland’s most trusted financial services brand. We have an increased range of lending products – consumer loans now complimented with home loans and business loans, and we look forward to working with Minister Chambers to further broaden the financial support that credit unions can offer members and their local communities.

Keeping key credit union services available to members since the onset of Covid-19 has been a key factor in maintaining morale in local communities. Credit Unions have long believed in playing our role in addressing major socio-economic needs and see the provision of financial supports to be part of that duty.

We have written to Minister Chambers setting out how credit unions can support him in achieving aspects of the Programme for Government and contribute to rebuilding the economy, both at local and national level.”

Supporting SME’s under financial pressure

Mr Johnson went on to say, “Credit unions have significant members savings available for lending and their renowned personal touch that is normally applied to consumers can equally be applied to SME’s at their time of need. We hope the Minister will support our efforts to be part of the Credit guarantee scheme and while the scheme only guarantees a proportion of the money lent, we would be prepared to carry the balance of that risk for businesses in our local communities.”

Credit Unions are ready and willing to invest in social, co-operative and affordable housing schemes that could otherwise stall as a result of Covid-19

“Investment in social, co-operative and affordable housing schemes is required for Ireland to solve its housing crisis, and demand for this segment may increase as more people’s incomes suffer. Such lending is well aligned to the credit union purpose. We would support an amendment of the Credit Union Act to allow providers of such properties, such as AHBs, Housing Co-Ops, Local Authorities and others to become credit union members solely for the purpose of borrowing for their constituted objectives.”

Covid-19 Recovery Bond

By | News

Credit Unions support the ordinary saver in accordance with their statutory object – to promote thrift among its members by the accumulation of their savings. This will continue, indeed funds are flowing into credit unions as they are highly trusted.

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West of Ireland Credit Unions in Proposed Merger

By | News

On 15th June 2020, a proposed merger between St Anthony’s & Claddagh Credit Union & St Jarlath’s Credit Union was announced. Combining the resources of the two successful credit unions will create one of Ireland’s most significant credit unions, which will be hugely beneficial for members, local communities and Galway in general. The two credit unions have successfully collaborated on a number of initiatives over the past number of years, and have also been to the forefront of many major projects which have benefited them and indeed other credit unions throughout the country. In particular these have included digital-marketing and member engagement roll-outs. The two credit unions are strong both financially and reputationally, and with the advances they have made in digitising their services, they have significantly improved member experiences by making it easier for people to do business with their credit union.

CUDA, particularly through its collaborate digital development hub, the Solution Centre, is hugely impressed with the innovation and sector leadership shown by St Anthony’s & Claddagh and St Jarlath’s Credit Unions over the last few years and wish them well with this initiative.

Update on engagement with Registrar to CUDA communications

By | Owner Members, Representation

Dear all,

We have received a response to our correspondence of 7th April and 22nd May from the Registrar. It is a lengthy and detailed response, and we are pleased that the Registrar has offered to host a workshop session with us to discuss the various policy questions we raised and also to work with us on the operational side of things in preparation of financial year-end.  Please see here the letter received from Patrick Casey, Registrar of Credit Unions, as well as, for your information, a copy of the CUDA letters issued on 7th April here, and on 22nd May here.

Our letter of 22nd May highlighted that much has happened since our initial communication, in particular there have been many helpful insights gained as you and other credit unions demonstrated their operational resilience and more recently positive return to some lending activity. In the intervening time CUDA has sought and achieved confirmation that all borrowers, and all forms of loan repayment arrangements, will be treated equally by the CCR, of some flexibility on reporting, and that the CBI has trigger points for the key measures.

We also had the opportunity, as did other stakeholders, to submit to the CUAC for their report to the Minister on impact of Covid-19 on credit unions and recommendations for their role in recovery of the economy, and this process further refined our recommendations and who can make them happen. Our submission will also certainly contribute to a constructive workshop with the RCU as it shows how our regulatory asks fit into a wider plan.

On a macro level there is actually good alignment between the CUDA member agreed strategic plan and the CBI agenda, namely clear need for business model change, collaboration, best risk management and governance, and related balance sheet evolution. On a micro level, we received our goal to get confirmation that CBI are working on the key areas we identified, and as they opt to recap the source regulation or legislation they do not share insight to their trigger points. While agreeing to work with any concerned credit union, in response to our request for a pragmatic approach, you will also see in places responses to matters we did not raise which appear to be a reaction to some of the inappropriate commentary recently circulating. The attached communication from the Registrar will be posted on their website in due course.

The CUDA Management Committee have agreed to continue with the measured approach pursued by CUDA, as it has acheived the goal to get confirmation that CBI are working on the key areas identified in our letters and they will continue to work with us on them. We will also have the opportunity to clarify some important points, for example:

  • Humanitarian lending – we are seeking the Regulator’s view on the issue where credit unions are encouraged to act, but often without full facts on how government will support the member financially with regard to income subsidies;
  • Investment assets – while the rules are clear we are trying to understand how the regulator will react if all sovereign and bank issuers have their credit downgraded, i.e. plan for worst while hoping for the best;
  • Liquidity – previously we worked with the RCU investigating a centralised mechanism, and we would like to revisit this again, similar to that in the US which is supervised by the  NCUA, and with something this complex we had hoped that the regulator will consider their support.
  • Y/E 2020 – the RCU confirmed that they are speaking to auditors and international accounting standards will apply, and we have requested an earlier release of the annual circular – ideally this month.
  • Solvency – one of the main learnings during the intervening period is that this, hopefully, will prove less of an issue due to Covid-19 directly. What is clear, however, is that the key areas of savings inflows, the ability to convert these into loans, possible requirement for bad debt provisioning, and the balancing of these to maintain capital requirements are clearly the responsibility of the Board. Therefore, it cannot be overstated the importance of documenting how you are making all decisions relating to these matters, in particular capture all the assumptions you are making and the basis for them.

We take huge pride in the way that you all have reacted to the crisis ensuring that you continue to offer essential services to your members. Keeping credit unions open has been a key factor in maintaining morale in your relevant community. CUDA will continue to deliver solutions to support you as you support your credit unions members. With that front of mind, we look forward to taking up the offer by the Registrar to host a workshop, and while focusing immediately on operational and financial challenges in the short-term, we will continue to lobby for the regulatory changes that are required down the line. We will also continue to engage with the Minister, and CUAC, to seek the legislative changes that are required.

Many thanks and please contact me if you have any queries.

Regards for now,

Kevin