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Michael Fortune

Jun 26 2023

Customer-centered credit unions do not need rules made for bad bankers

By News

By Kevin Johnson, CEO of the Credit Union Development Association 

It’s about five years since the Central Bank of Ireland (CBI) published a report on behaviour and culture in the Irish Retail Banks 1 . That report found that the banks had significant work to do in order to ensure they were putting their customers first. This report paved the way for the introduction of new rules which should help consumers dealing with financial service providers in this country to be confident that their best interests will be protected 2 . The new rules should also ensure that financial institutions put consumers at the heart of their culture and decision-making. These rules, which are coming in under the Central Bank (Individual Accountability Framework) Act 2023 which was partially commenced April, are being planned for roll out by the end of the year.

These rules are long overdue for the banks. There have been a number of major banking scandals in recent years which has seen ordinary hard-working customers lose out. The tracker mortgage controversy – which saw tens of thousands of customers being overcharged by their lenders when they were wrongly denied a tracker rate and moved onto a higher interest rate – is one of the more recent ones.

It will involve a considerable amount of time for the banks to adapt to these new rules but given their track record, it is imperative that they do so.

Credit unions however are another case in point. Credit unions are already putting consumers first and have been doing so since they were established. Evidence is there to support this. Irish credit unions have consistently topped the customer experience league table since 2015, when the CX Company, which is behind that table, began its annual survey. Credit unions are also highly regarded by the public, coming out tops on reputation in a study published earlier this year. The study, known as the Reputations Agency Ireland RepTrak study, measures the level of trust, respect, admiration and esteem the public has for 100 organisations in Ireland. Credit unions had the highest score in that study this year.

Credit Unions consistently do well in these surveys because they continue to operate under a culture and ethos of putting their members, or consumers, first. This ethos is enshrined in credit union legislation which safeguards the economic, social and cultural well-being of its members as well as their communities 3 .

The Central Bank is planning to bring credit unions within the scope of the new rules being rolled out under the Individual Accountability Framework. This is disproportionate and unwarranted. It will burden credit unions with an extra layer of unnecessary regulation and costs. Credit unions are already meeting appropriate standards set out in law and regulations.

It was the poor behaviour of banks – not credits unions – which led to the development of the Individual Accountability Framework rules. So why is the Central Bank planning to roll the rules out to credit unions? Target rules correctly and they should achieve their aims. But for credit unions this will be rules for the sake of rules and this never works. Neither in this case will a one-size-fits-all approach. The Central Bank needs to differentiate between banks and credit unions.

The Central Bank has not taken into account the cooperative credit union model that helps differentiate credit unions from banks and investment firms.

Sometimes the cooperative credit union model is dismissed as being of a ‘Corinthian spirit’ – meaning that it is like an enthusiastic amateur, suggesting that a sector governed by volunteers could not be as good as one with remunerated leaders. At CUDA, we strongly disagree with that interpretation as we see the volunteer as providing a professional service pro bono. Furthermore, these volunteers are supported by a team of professional managers and staff.

Rather than bringing credit unions under the scope of these new rules, the Central Bank should seek to understand what makes credit unions so exceptional in this regard. Rather than trying to incorporate credit unions and swamping them with further costly requirements, the Central Bank should seek to understand their motivation, as this is what drives outcomes. To borrow a line from St. Paul to the Corinthians, “the fact that there is only one loaf means that, though there are many of us, we form a single body because we all have a share in this one loaf”. Credit unions share that loaf with their members and are clearly on the side of the consumer. Why fix something that’s not broken?

1 Behaviour and Culture of the Irish Retail Banks July 2018

2 See release from the Department of Finance in April 2023.

3 Credit Union Act 1997, Section 6(2)

 

Opinion piece on the Individual Accountability Framework, published in the Irish Independent the weekend 24th June 2023

Jul 05 2021

Statement from Credit Unions following announcement of withdrawal of Provident from Irish market

By News

With the withdrawal of Provident Personal Credit Limited (Provident) from the Irish market, credit unions are keenly aware that many of their existing and past customers will be affected. Credit unions remain rooted in local communities and wish to remind people that they are open to help with their personal financial needs.

If a person’s previous lender of choice, in particular Provident or other lenders, exit the Irish market, they may wish to get in contact with their local credit union where they’ll receive a warm welcome.

Subject to the terms and conditions of the local credit union, people can apply for a loan and avail of the many services credit unions have to offer. If they previously had a credit union account but have not used it in a while, they may still be able to avail of credit union services.

For those impacted by the recent decisions of banks and other loan providers, please contact your local credit union today.

Jun 26 2020

Journey to the Model Credit Union Digital Webinar

By Events, News

The Solution Centre hosts two Webinars showcasing Digital solutions to improve member engagement – don’t miss the next one on 30th June at 3pm read more here

The Solution Centre is pleased to invite you to a webinar that will focus on the digital shared services and platforms we have developed and how they can help your credit union grow lending, reduce costs and better engage with Members. You will also see how they are being used with great success by some of your fellow credit unions.

The webinar will take place on Tuesday 30th June from 3 pm to 4 pm. If you would like to attend please complete the short registration form below. Registration is open to everyone so please do feel free to share this link with any colleagues who may be interested.

Registration:  Here

The webinar will cover;

Hive Platform – a bespoke Member engagement platform built collaboratively by a group of credit unions to manage digital marketing and Member communication more effectively. To date it has helped originate €120 million in lending while reducing IT costs.
Digital Marketing Shared Services – cost effective shared services available to improve the performance of digital marketing.
Digital Processes – How to improve Member experience with online loan application and member onboarding processes that integrate seamlessly from digital marketing to the Hive platform.
FinTech Enablers – The FinTech plug-ins that integrate throughout the Member’s digital journey to give them an exceptional online experience that makes it really easy for them to do business with your credit union, while improving credit union performance.

We do hope you can make the webinar, but if you are not available please do contact us at info@solutioncentre.ie to discuss digital solutions at any time.

Jul 11 2018

Credit unions will use a proportion of €9bn in lending capacity to reduce SME lending costs

By News

“Rapid growth in Credit Union lending expected to continue as Solution Centre rolls out enhanced Credit Union Business Model”

Responding to today’s launch of the Joint Committee on Business, Enterprise and Innovation’s Report entitled “ The Cost of doing Business ” and last week’s decision by the Department of Rural and Community Development and the Department of Finance, not to support the establishment of a new local public banking system, CUDA (Credit Union Development Association), the representative and lobby group for Ireland’s largest credit unions, said that its 48 strong network of the more progressive credit unions can fill this void and provide the much needed competition to the banks.

Speaking at the launch today, Kevin Johnson, CEO of CUDA, which is also behind the Solution Centre – a collaborative initiative that supplies product development and business supports to the Credit Union sector to enable them to lend to non-core sectors,

“We welcome the excellent work of both Joint Committees and their recognition that the cost of doing business, particularly the cost of borrowing needs be brought down, and that priority should be given to working with the existing framework provided by credit unions and An Post networks nationwide. Credit unions are already playing an increasing role in the Irish retail financial sector and CUDA anticipates working closely with the Central Bank of Ireland to expand the product and services that credit union branches throughout the country can offer individual and business members.

While having enjoyed strong lending growth in 2017, our 48 member credit unions are forecasting rapid growth in 2018 & 2019.”

CUDA say that it has taken a leadership role in lobbying for and developing the changes that are essential for credit unions to meet the demands of the current financial landscape. Through the Solution Centre, they have introduced new products, and implemented new processes and systems that will deliver the benefits that the advocates for public community banking are seeking.”

Mr. Johnson continued,

“Credit Unions have the lending capacity and are developing the expertise to take an enhanced role in relation to lending to SMEs. In tandem with the accompanying management and advisory support structures offered by the Solution Centre, numerous credit unions throughout the country could provide loans to SME’s, say up to €75,000.”

Mr. Johnson concluded,

“Credit unions can be at the financial heartbeat of our indigenous economy and can create a platform for rural revival, and indeed urban stimulation. With 268 credit unions and billions of euro currently available to lend, credit unions are very well positioned to deliver this service.”

Ends

 

Note to the Editor

The Solution Centre

A group of the country’s strongest credit unions established the Solutions Centre, a FinTech facilitated by CUDA, which supplies product development and business supports to the Credit Union sector and has embarked on an ambitious business transformation programme for the sector, of which mortgages is just one milestone.

Rather than simply replicating the actions of banks, the Solution Centre believes that credit unions have the flexibility and adaptability to quickly adopt new ways of doing business that will see a re-building of their market share. Credit Unions participating in our digital loan marketing programme have seen loan growth of 10-20% in a relatively short space of time, with minimal investment. It’s clear the movement’s leading credit unions have embarked on a transformative digital journey.

With 48 of the larger and more progressive credit unions, representing one third of credit unions members, coming together under the Solution Centre umbrella – we now have a structure to facilitate credit unions to achieve their goal of continuing as consumer-owned co-operatives, while delivering much needed new products and services to their members.

 

CUDA

CUDA, the Credit Union Development Association, was legally incorporated in 2003. In its early days it was the representative voice, on behalf of its owner member credit unions, with legislators and regulators. It has since evolved and now, as well as providing a ‘voice’, it is increasingly providing support facilities in the areas of regulatory compliance, risk management, shared services and competency development.

Jan 15 2017

The future for Credit Unions – Kevin Johnson – Sunday Business Post – 15th January 2017

By News

Ireland’s credit unions must try to meet the needs of borrowers and savers by evolving

What’s uniquely interesting about credit unions is that the ‘problem’ is how to deal with, and build on, success. Credit Unions have approximately 3 million members, who continue to shrewdly save and have now amassed in excess of €12bn in savings. The challenge for credit unions is how to help their members who continue to build their ‘safety net’ through savings with a fair reward without putting these funds at risk – the latter of which is a shared objective with the regulator. Consistent with the objectives of the credit union, as enshrined in legislation, they also want to meet the borrowing needs of their members with a range of loans. This will ensure mutual benefit for savers and borrowers, by charging a fair rate to borrowers and paying a fair rate to savers.

Credit unions have embraced the enhanced governance framework, introduced in the Credit Union Act 2012 and subsequent regulations, at significant additional costs, but, as intended in the report by the Commission on Credit Unions, the quid pro quo of a more enabling tiered regulatory approach has not yet been delivered. It is worth noting that credit unions are more restricted now than prior to 2012 as a result of these new regulations – that’s not good for consumers, communities or their credit unions.

So what’s the way forward? There are several actions that can be taken to ensure the uniqueness of the credit union model is recognised by decision makers, while credit unions themselves can continue to evolve their capabilities;

  1. Establish a ‘Select Sub-Committee on Credit Unions’ from the Committee on Finance, Public Expenditure and Reform, and Taoiseach to play a key role in scrutinising the ongoing relevance of legislation, policy and related credit union matters;
  2. Introduce proportionate regulations, which will allow some credit unions to continue offering basic savings and loans only, while allowing other credit unions to develop and offer a greater range of services, provided they have what is necessary to manage the additional inherent risks.
  3. Amend the Credit Union Act ‘97 to allow credit unions lend directly to Housing Bodies for Social & Affordable Housing. This will let them meet their social objectives which will help counter balance any perceived loss of cohesion and identity as they get bigger;
  4. Reflect the importance of credit unions to the people of Ireland by having their regulator, the Registrar of Credit Unions, report directly to the Governor of the Central Bank of Ireland.
  5. Build on the successes of 2016, probably the biggest year of change in the credit union sector for decades, with considerable consolidation through mergers and the establishment of non-partisan collaboration groups such as the Solution Centre.

While CUDA will relentlessly continue to seek actions 1 to 4 above, action 5 means that credit unions offering a full range of financial services, from personal loans, mortgages, payments, investments, insurance and pensions, is now closer than ever before. We are seeing a rapidly increasing level of cooperation between credit unions, which initially focused on shared management service arrangements such as regulatory compliance and risk management, but has now expanded to significant projects supported with full risk analysis to enable a more expedient regulatory approval process facilitated through the formation of the Solution Centre, a hothouse unit developing specialist products, supports and solutions for credit unions and now has membership of credit unions who manage over one third of the assets of the sector.

Credit Unions who share the desire to develop their business model are collaborating through the Solution Centre and are starting to deliver a stronger and more forthright sector. This is good for consumers on so many levels – apart from ensuring fair interest rates and fees in the market, it allows people to be part of a highly-networked community focused on economic, social and environmental change.

It’s already working because initiatives are fully thought through; for example, in the case of the new mortgage support offering, a full assessment of all the steps in the process was completed and those credit unions utilising this resource will have ongoing access to specialist expertise. This should give confidence to regulators to extend the limits under which all credit unions currently operate.

Credit unions working together have the desire and the skill-set to develop and to become a real alternative to banks and other finance houses.  Credit unions have approximately €4billion out in loans, which is less than 30% of their assets, ideally this should be closer to 70%. This means they have a staggering €6bn available to lend.

So, what does all this development mean for credit union members? Anyone who joins will get improved, better tailored financial services in terms of mortgages, personal lending and savings, while also participating in a unique relationship with their credit union.  While members are often aware of how dependent they are on their credit union, it is actually an interdependent relationship. In practical terms, credit unions will improve their communications to ensure that members appreciate the co-dependent benefits of doing business with their credit union, and will not want or need to go elsewhere for their financial services.

Kevin Johnson

Chief Executive Officer

Credit Union Development Association

Jul 06 2016

CUDA Welcomes CUAC Report

By News

 CUDA welcomes CUAC report

 “Modernising Credit Union Lending rules will deliver real value in mortgages and personal loans”

The representative body for Credit Unions CUDA has welcomed the publication of the CUAC report which reviewed the implementation of the recommendations in the Commission on Credit Unions.

Commenting on the findings, Kevin Johnson, CEO of CUDA, “The report highlights the long overdue need to review the current credit union lending limits. Modernising these will deliver better value for consumers in personal loans, mortgages and other financial services areas, something that the Government acknowledges is sorely missing in our economy.

We are also pleased to see our call has been listened to – we have long been advocating for a change in the outdated long-term lending limits to more accurately reflect consumer demands and the current financial environment”.

CUDA has also strongly campaigned for changes to be implemented that will allow Credit Unions to immediately provide funds for social and affordable housing, thereby helping to meet the serious supply problems facing prospective home buyers.

Kevin went on to explain, “Fundamentally, Credit Unions offering a full range of account and financial services, from personal loans to mortgages and savings to pensions, will drive greater competition. This will lead to lower cost products which can only be good for all consumers and which is all but absent from the market at the moment. We look forward to working with the proposed Implementation Group to make this a reality.”

The representative body say that an aspect of the report that struck them was that “the need for leadership at the centre and an understanding of the risks involved in longer-term lending were flagged by the Central Bank as areas of concern for credit unions seeking to move in this direction.”

Kevin commented, “This is something we are firmly behind and we have made great strides in this regard with the establishment of the “Solution Centre” which facilitates collaboration, innovation and business development”.

The Solution Centre, which is open to all credit unions, comprises a selection of the country’s strongest credit unions and is a hothouse unit developing specialist products, supports and solutions.

Kevin went on to say, “We have already delivered a number of projects that were drawn from the objectives of participating Credit Unions strategic plans. One of the first of these products will be supporting a mortgage offering which is expected to be available in August to participating credit unions representing approximately 25% of credit union members”.

CUDA says the report also correctly acknowledges the great work of all stakeholders which is resulting in ever strengthening Credit Unions.

Kevin concluded, “We thank the CUAC for the thoughtful consideration they have given to our proposals. Credit Unions continue to grow their market share of the consumer loan market and, now with strong capital, stronger governance and greater capabilities, they are fantastically positioned to broaden the range of services they offer to current and potential members”.

Jul 04 2016

Credit Unions call for Dublin differentiation, a ‘No Equity’ category and an LTI of 3.75 in Central Bank mortgage rules review

By News

“Credit Unions shouldn’t be unreasonably prevented from delivering competition to drive down mortgage rates”

The Credit Union Development Association (CUDA) intend to present its submission to the Central Bank of Ireland ahead of its review of its macro prudential mortgage measures, in which it will call for three simple but equitable changes to the current rules for new mortgages.

At the same time, CUDA is seeking to have the long-term credit union lending limits removed or substantially changed as it believes that they are unduly restricting competition in the mortgage market. The representative body says that Credit Unions are massively under lent with billions of Euro currently available. They contend that delivering greater competition to consumers could finally see standard variable rates (SVR) drop below 3%.

Presently, credit unions are generally only allowed to lend 10% of their loans, on terms of 10years or more. CUDA believes that this rule should be removed as there are plenty of other prudential regulatory controls in place to ensure the solvency of those credit unions that wish to lend more over the long-term.

Lending a greater proportion of funds over a longer period would also enable credit unions to offer enhanced long-term savings products with higher interest rates.

Mortgage rules review

CUDA is calling for a change in the Loan to Income (LTI) limit which currently stands at 3.5 times. The Credit Union representative body will ask the Central Bank of Ireland (CBI) to allow for a slight increase in the LTI – to allow people borrow up to 3.75 times their income. The Solution Centre, a CUDA managed innovation business unit, has researched the issues in anticipation of a new mortgage offering and believes that this relatively small change could significantly boost the number of couples on average income that qualify for a typical starter home particularly in Dublin where prices are so much higher.

A new starter house in Dublin typically costs €300,000 and most people reasonably assume that first time buyers will need a €38,000 deposit under the Loan to value (LTV) rules – 10% up to €220,000 and 20% on the balance. But even assuming a higher than average household income of €70,000, the current LTI of 3.5 will mean that they will need a much bigger deposit of €55,000  regardless of whether they qualify for the lower First Time Buyer exemption under the LTV rules.  If the LTI is raised to just 3.75, this would reduce the deposit required to €37,500 which is still a sizeable deposit, however it is more comparable with the €38,000 LTV deposit requirement.

CUDA’s submission will also suggest that the categories of First Time Buyer (FTB) and Trader-up (TU) should be changed to reflect the financial environment in which we currently live. They contend that when these phrases were first coined, it was assumed that while applicants might have had savings, FTBs didn’t have any equity from a previous home while TU’s always did. So the rules were softened for FTBs to give them a better chance. Unfortunately, many families in their 30s, 40s and 50s are now in the TU category – looking to trade up to a bigger \ family friendly house, however, having bought just before the downturn, they don’t have any equity to carry from their current home. CUDA is advocating that buyers should instead be categorised by ‘Equity’ and ‘No Equity’.

CUDA also believes that the mortgage lending limits in Dublin and other large urban areas need to reflect that it is a wholly different market to the rest of the country, with much higher purchase prices and far higher rental prices.

According to Kevin Johnson, CEO of CUDA, “we know the demand is there, but many people cannot meet the new rules because of Loan to income (LTI) rule. While Loan to value (LTV) limits are spoken of far more in the media, we believe that a small modification to the LTI rule would have a bigger impact without causing an undue spike so as to avoid any significant pressure on house prices.

The loan caps have had the, perhaps unintended, but negative consequences of forcing more and more people to remain in rental accommodation in big cities particularly Dublin which is putting upward pressure on rental rates. The increase in rents has been a significant contributor to the homeless crisis as people on rent support or supplement are unable to compete with the private sector for increasingly reducing number of properties. CUDA believes that the current Central Bank rules are contributing to slowing the migration of people from rental to purchase, which is having a knock on impact on everyone else in the rental sector.”

Credit Union Mortgage lending limits – Competition

CUDA is also engaged in a campaign to have the outdated long-term lending limits reviewed and modernised to more accurately reflect consumer demands and the current financial environment.

According to Kevin, ‘We believe that Credit Unions shouldn’t be unreasonably prevented from delivering competition to drive down mortgage rates. The current credit union limits are arbitrarily capped at 10% of all lending, a crude measure introduced many years ago that is now out of date. The Central Bank has indicated its desire to see more completion in the mortgage market; we believe that this is the best way to achieve it.’

CUDA

CUDA, the Credit Union Development Association, was legally incorporated in 2003. In its early days it was the representative voice, on behalf of its owner member credit unions, with legislators and regulators. It has since evolved and now, as well as providing a ‘voice’, it is increasingly providing support facilities in the areas of regulatory compliance, risk management, shared services and competency development.

 The Solution Centre

A select group of the country’s strongest credit unions led by the CUDA established The Solutions Centre, a hothouse unit developing specialist products, supports and solutions. One of the first of these products will be supporting a mortgage offering which is expected to be available in July to participating credit unions representing approximately 25% of credit union members.

Feb 02 2016

CUDA Training and Development Calendar 2016

By News

The CUDA Training and Development Programme for 2016 includes a number of targeted areas for Boards of Directors, Board Oversight Committees, Management Teams and Credit Union personnel.  All of the programmes are devised collaboratively between CUDA and experts in the field to ensure the content is specifically designed to support Credit Unions in the current challenging environment.

CUDA encourages participation from both member and non-member Credit Unions at all training events, thereby providing a valuable opportunity for networking and knowledge sharing. Leadership development for Boards of Directors, Board Oversight Committees and Management Teams, all mandatory training requirements and training events specifically designed for Credit Union Staff are all included in the 2016 CUDA Training and Development Programme.

Download the CUDA Training & Development Programme for 2016

Jan 31 2016

CUDA AGM & Conference 2016

By News

The 2016 CUDA AGM and Conference took place in the Slieve Russell Hotel Golf & Country Club, Ballyconnell, Co Cavan on Saturday 30th January 2016. It was yet another exciting and informative event, with participation from numerous credit unions.  Speakers on the day included Minister for Arts, Culture and the Gaeltacht, Heather Humphreys and the Registrar of Credit Unions, Anne Marie McKiernan.

If you would like further details on the conference, please email info@cuda.ie or call the CUDA office on 01 4693715.

Jan 03 2016

Sunday Independent – Kevin Johnson, CUDA CEO – 3rd January 2016

By News

Indo logo

Credit unions must be trusted, not subjected to the dead hand of the State

The new tiered regulations will lead to better-value banking services for all, writes Kevin Johnson

Kevin Johnson

PUBLISHED     03/01/2016

Since its foundation in 1958, the credit union system has flourished in Ireland, both in urban and rural communities. The value that credit unions bring to Ireland is rooted in the simple co-operative business model of people saving together and lending to each other at affordable interest rates.

Despite the lip service paid to the ideal of preserving credit union uniqueness, we fear that uniqueness will be steadily chipped away over time and ultimately lost, unless clear steps are taken and constant vigilance is maintained to ensure that the rules evolve with the diverse needs of ordinary people.

There has to be appropriate rules for each type of financial institution. Similarly, there have to be appropriate rules proportionate to the nature, scale and complexity of each credit union, as recommended by the Commission on Credit Unions.

The blueprint for the future of credit unions in Ireland was set out in the Commission’s report, published back in April 2012. This was a comprehensive set of recommendations, including a tiered regulatory framework, which was endorsed by all the stakeholders involved, including credit union representative bodies and the Central Bank.

The Commission’s report provided a factual insight into the financial position of credit unions; it looked at international best practice and presented its views on where the credit union movement in Ireland should be headed.

It went on to make proposals for stabilising and restructuring the sector and for strengthening the legislative and regulatory frameworks, including an improved governance regime. This was adopted as government policy, resulting in the Credit Union Act of 2012.

Our ongoing concern, as expressed by us and other key stakeholders throughout 2015, is that the Central Bank seems determined to implement regulations in a manner inconsistent with the spirit and intent of what was agreed. On top of all the new costly responsibilities that credit unions had to implement, the Central Bank was imposing further restrictions on all credit unions.

These limit how much people can save in their credit union and, critically, the nature and term of lending that credit unions can provide.

Recently, the Minister for Finance commenced the remaining sections of the 2012 Act which activated these regulations.

In doing so, Mr Noonan confirmed that he instructed the Credit Union Advisory Committee (CUAC) to carry out a review of the implementation of the recommendations set out in the report of the Commission on Credit Unions. This will commence immediately and conclude in June 2016.

While it must be recognised that this review should not be necessary, it is clear that it is needed. Unfortunately for consumers, it would have been more practical to see it conducted before the new regulations were effected. However, it presents a chance to get back on track with the blueprint for the future of credit unions in Ireland as originally set out.

The Registrar of Credit Unions has now confirmed that some credit unions will be allowed apply to accept deposits of over €100,000. While this will be welcomed by all large credit unions, and particularly by those credit unions that have built scale following a merger, the real benefits will flow to consumers as this is a first step in the establishment of tiered regulation.

Tiered regulation, done properly, will allow some credit unions to continue to offer basic savings and loans, while allowing other credit unions to develop and offer a greater range of services as long as they have what is necessary to manage the additional inherent risks.

Credit unions need to be allowed to compete with banks. For example, restricting them to solely competing with money lenders is doing consumers a huge disservice.

When it comes to global best practice, the Canadian credit union movement is one of the best, delivering low-cost bank-competing products to millions of members. Their success is based on the fact that they are organisations inspired by the community and working for the community. Their ethos is identical to Irish credit unions, but their regulation, operations and success for consumers are vastly different.

Fundamentally, credit unions offering a full range of account and financial services, from debit card to mortgages to pensions, will drive greater competition, something that is sorely lacking in Ireland at the moment.

We see real potential to replicate much of that model, which could see credit unions across Ireland prudently lend a further €7bn in short, medium and long-term finance.

This is good for consumers on so many levels – apart from ensuring fair interest rates and fees in the market, it allows people to be part of a highly networked community focused on economic, social and environmental change.

For any government – sitting or potential – to be taken seriously in its stated goal of preserving the ethos and philosophy of credit unions, we feel it must demonstrate that regulation is about balance: on the one hand ensuring that consumers have access to basic financial services on competitive terms, while on the other hand, ensuring that the provider does so without taking on too much risk.

Unfortunately, in the last few years, the pendulum had swung too far to over-zealous regulation.

The vast majority of credit unions are financially sound, compliant, competent and ready to provide more services to more people.

The acknowledgment of the role of tiered regulation will enable most, but particularly those with scale and expertise to offer the services that their members rightly expect from a modern credit union.

Kevin Johnson is chief executive officer of the Credit Union Development Association (CUDA)

Sunday Indo Business

http://www.independent.ie/business/irish/credit-unions-must-be-trusted-not-subjected-to-the-dead-hand-of-the-state-34331204.html