Skip to main content
Category

News

Oct 13 2023

CBI Public Statement: Update on Central Credit Register error

By News

The Central Bank of Ireland issued a public statement on 21 August 2023 in relation to an archiving error that affected the retention period of some information on borrowers’ credit reports held on the Central Credit Register (CCR). Today (13 October 2023) the Central Bank is providing an update on the matter.

As previously outlined, certain borrower information was retained on the CCR for up to an additional three months, and was available for inclusion in credit reports between 1 June and 7 August 2023. While the information was an accurate representation of what was previously reported by lenders, the additional three months of information should not have been held or made available in credit reports during this period. This constitutes a breach under data protection legislation.

The error was first brought to the Central Bank’s attention by a member of the public on 3 August. It was fully resolved by 7 August 2023, with the database reflecting the correct five-year retention period. Credit reports provided from 7 August 2023 do not reflect any additional information.

Once the error was rectified, the Central Bank focused on establishing any impact of this incident on borrowers. The main mechanism through which borrowers could be impacted is where the CCR contained information around loan performance over these additional three months, which may have adversely affected decisions by lenders to extend new credit or decisions by borrowers to seek new credit.

As the information held on the CCR is one of many factors that lenders use when making credit decisions, assessing the impact of this error has been a complex process. The CCR does not decide if a loan is approved or not, lenders make that decision. The CCR also does not calculate a credit score. Our assessment of the impact has required extensive engagement with 270 lenders to determine whether, and if so how, the additional credit information influenced their credit decisions.

To date, the Central Bank’s investigation has established that:

  • The records of 20,872 borrowers who had performance data pointing to repayment difficulties in May, June or July 2018 (the three additional months that should have been deleted as planned) were accessed by either lenders or borrowers.
  • These borrowers were associated with 31,013 enquiries by lenders (as borrowers may have made more than one credit application). Within that:
  • For 30,963 credit enquiries, lenders have confirmed that their credit decisions were not impacted by the excess data. There are a range of reasons for not being impacted, including lenders’ own lending policy and the timeframe that it considers.
  • For 9 credit enquiries, lenders have confirmed that the excess data was one of the factors which influenced their credit decisions. These enquiries related to personal loans and credit card products.
  • For 41 credit enquiries, lenders have not yet been able to confirm if there was any impact. The Central Bank continues to engage with lenders in relation to this cohort.
  • There were 820 borrowers who accessed their own report, which included information that pointed to repayment difficulties during the additional three months. The records of some of these borrowers were also accessed by lenders, as above.

A phased communication process is underway and the Central Bank has written to those identified as being at highest risk of being impacted by the error. All borrowers associated with applications where lenders have confirmed that the excess data influenced their credit decisions have been contacted. The Central Bank has engaged with the lenders to ensure that there is a contact point in place for impacted borrowers should they wish to discuss their previous application or re-apply for credit. The lenders have also confirmed the excess information previously received will not impact on any new applications.

In light of this incident and to strengthen controls in this area, the Central Bank is also initiating a broader external review of the data management and data protection controls in place with respect to the operation of the CCR.

The Central Bank has engaged with the Data Protection Commission (DPC) throughout this incident. We have received notification from the DPC of the commencement of an Inquiry into this breach. The Central Bank takes our data protection obligations seriously and will continue to engage fully with the DPC on these matters.

Vasileios Madouros, Deputy Governor for Monetary and Financial Stability, said: “The Central Bank of Ireland sincerely regrets, and apologises for, this error. While we have a range of controls in place in the operation of the CCR, it is clear they were insufficient to prevent this specific incident. This falls short of our own standards and we have implemented immediate measures to prevent this error from reoccurring. We are also commissioning a broader external review of data management and data protection controls in place when operating the CCR. The CCR is an essential service to enable better credit decisions by borrowers and lenders, and it is crucial that we hold ourselves to the highest standards in operating it. We will continue to engage fully with the Data Protection Commission.”

Further information on how the Central Credit Register processes data can be viewed at http://www.centralcreditregister.ie/. Our public contacts helpline can be reached on 0818 681 681. Borrowers can request a copy of their credit report through the CCR website.

Further information

Media Relations:  media@centralbank.ie

Ewan Kelly: ewan.kelly@centralbank.ie / 086 158 7094

Sep 05 2023

Bizfin – CUDA Credit Unions partner with Government in Ukraine Credit Guarantee Scheme

By News

Credit Unions support local businesses impacted by the economic consequences of the conflict in Ukraine by partnering with the Department of Enterprise, Trade and Employment (DETE) on the Ukraine Credit Guarantee Scheme

 

The Credit Union Development Association [CUDA], launched its Small Business Lending solution for credit unions to offer business loans to SMEs, ‘BizFin, Smart business finance, made simple’ in early 2021.

CUDA announced today that two of its large credit unions, Capital Credit Union and Credit Union Plus, with a combined membership of over 100,000, are now successfully partnering with Government in the low-cost Ukraine Credit Guarantee Scheme through BizFin. CUDA believes that credit unions will succeed in working with micro, small & medium sized businesses, adversely impacted by the conflict in Ukraine who are facing supply chain disruptions and increased input (including energy) costs.

Credit unions believe that SMEs have faced challenging trading conditions for over 3 years, which may have led to a sustained lack of investment, while necessary at the time, could have a detrimental impact on competitiveness.  The expectation is that as the economy gets back on its feet, lending should also grow.  Economic forecasts for the Irish economy remain positive [1]and lending will be required as part of SME’s capital investment strategy to fund expected growth.

The clear benefit for Credit Unions on partnering on a Credit Guarantee Scheme, is they are in receipt of an 80% Guarantee from the SBCI /or the Department of Enterprise, Trade and Employment, enabling them to offer competitively priced loans to their business members.

CUDA acknowledge that credit unions, who were again voted most trusted organisation in 2023 are more involved in their local communities, a consequence of which is more local businesspeople will be willing to sit down and discuss the merit of them participating in this scheme.

Kevin Johnson, CEO of CUDA commented, “

“As the trusted provider of financial services in communities throughout Ireland, we believe that many sole-traders and small business owners will feel more comfortable dealing with credit unions, particularly where they can receive a fast answer to their credit application. Many of these solid businesses are struggling due to high increase in costs, particularly energy costs and are now at a point where they need to review their working capital to ensure they are well positioned for the future.

We have designed the standalone business website, Bizfin.ie, to support this initiative which will be accessible to all business customers of the participating credit unions. They will be able to apply for business loans as well as apply for credit union membership via this site.”

Ends

  

About Ukraine Credit Guarantee Scheme

The Ukraine Credit Guarantee Scheme is offered by the Department of Enterprise, Trade and Employment to provide viable SMEs, including primary producers, impacted by economic challenges arising from the conflict in Ukraine with access to low-cost finance.

The scheme supports economic activity in Ireland, facilitating the provision of working capital and medium-term investment finance to businesses adversely impacted by the conflict in Ukraine who are facing supply chain disruptions and increased input (including energy) costs.

Borrowers will contribute to the cost of the scheme by paying a risk premium on the credit advanced. This premium will be incorporated into the margin on the loan, collected by the on-lender and paid to Government of Ireland.

 Loan Features

  • Loans from €10,000 to a maximum of €1,000,000 / €400,000 for BizFin Credit Unions, per borrower (subject to Loan Amount Criteria, see below for further details)
  • Repayment terms of between 3 months up to 6 years
  • Eligible financial products: term loan facilities.
  • Loan amounts less than €250,000 will be unsecured.
  • Amounts greater than €250,000 may be secured; however, a personal guarantee may only be sought in circumstances where it is required to capture supporting security, or where it is an uncollateralised personal guarantee and is limited to a maximum of 20% of the initial finance agreement amount.
  • Up to 90 days interest and/or capital moratoria are possible under the scheme. These remain at the discretion of the participating on-lender.
  • Loans will be available up to the 31 December 2024 or until the scheme has been fully subscribed.

 Eligibility Criteria

Borrowers must self-declare that:

  • Their costs have increased by a minimum of 10% on their 2020 cost figures due to the impact of the conflict in Ukraine.
  • Finance is being sought specifically as a result of difficulties being experienced due to the conflict in Ukraine and meet the specific criteria as set out in the Loan Purposes section.
  • Finance is being sought for a new loan. Refinancing of existing loans is not

How to apply

Step 1 – Applicants must first register on the SBCI Hub and submit an online Eligibility Application Form to check if they can access the scheme. Once the online form is completed, successful applicants will be issued with an eligibility code.

Step 2 – The applicant must provide this eligibility code to the Credit Union to begin their credit application process.

Please note that the SBCI eligibility code is not a guarantee of credit approval.

 

About BizFin

This Business & Community Lending solution is an initiative that commenced in participating credit unions in 2021. These credit unions have a strong desire to serve other sectors of the credit union   membership, namely micro, small & medium sized enterprises, and community clubs & associations.

Our strategy is to deliver prudent high quality lending growth within our catchment area, by offering secured and unsecured longer-term lending.

This is achieved by having the necessary in-house expertise & staff, coupled with the close collaboration of contributing credit unions.

In BizFin we have developed a uniform & consistent approach, so that every applicant will have the same transparent, professional & personal experience in every participating credit union.

If you would like to know more about a business or community loan, including the Ukraine Credit Guarantee Scheme, visit BizFin.ie.

 

[1] European Commission Economic Forecast for Ireland May 2023[/vc_column_text][/vc_column][/vc_row]

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

Mar 30 2023

CUDA comments on the CBI Report on Financial Conditions of Credit Unions

By News

The Central Bank of Ireland have today (30th March 2023) published its ninth edition of the Financial Conditions of Credit Unions Report.

Commenting on the Central Bank’s report on the Financial Conditions of the Credit Union sector, ‘Kevin Johnson, CEO of the Credit Union Development Association, which works with over 50 credit unions, said

“Loan volumes are up, and the loan-to-asset ratio is definitely improving, but not by as much or as quickly as we would like. We believe that there’s an absolute need to resolve this by expanding the loan profile of credit unions and prudently growing loan books across the sector.  

Competition in the mortgage market has reduced following the departures of Ulster Bank and KBC, and with the non-banks struggling to offer competitively priced products, there’s a clear opening for credit unions to substantially expand their mortgage products. CUDA has been at the forefront of this, with its members initially entering the mortgage market in 2018 targeting specific lending needs, since 2021 we have worked with credit unions to expand their offerings and we are now working to expand this to more credit unions. 

New legislation that is progressing through the Oireachtas and scheduled for enactment this year will support this, as it will allow credit unions to refer lending business to each other which means that even those credit unions without mortgage lending underwriting skills will be able to facilitate their members. 

Each credit union is a separate legal entity with its own Board and management team, and they are not currently permitted to share business. These changes will help credit unions make a greater financial, social, and environmental contribution as their legislation framework is modernised.

Credit Unions have significantly modernised in the past decade – their structure, legal and regulatory status, product offerings, and service delivery methods have advanced considerably. In particular their digital capabilities were accelerated during the Covid-19 pandemic. Members can still access the traditional set of personal loans and savings, and now they can also avail of current accounts, ‘one stop shop’ retrofit loans, mortgages, revolving credit, debit cards, community loans, agricultural loans, as well as loans for small businesses.  These are accessible face to face, over the phone or via online facilities.  Recent rises in interest rates will have a significantly positive impact on the ROA for all credit unions as this will result in them getting a better return on their investments.”

Dec 21 2022

CUDA welcomes the New Minister of State with responsibility for Financial Services, Credit Unions and Insurance

By News, Uncategorized

Credit unions have welcomed the appointment of Jennifer Carroll MacNeill as the new 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 Carroll MacNeill at this key time for credit unions.  We look forward to working closely with the new Minister on the Credit Union (Amendment) Bill 2022 as it progresses though the stages to enactment.  For many years credit unions have operated within outdated legislation – legislation that is not fit for purpose in this modern era. It is so important now that we ensure the final drafting is appropriate to avail of this unique opportunity that will facilitate credit unions to offer and deliver more products and services to existing and future credit union members.  At a time when our society faces many challenges, this critical element of the Programme for Government will undoubtedly contribute to strengthening the standard of living for so many people, both at local and national level ”

Nov 30 2022

Credit Union Development Association (CUDA) delighted to see publication of the Credit Union (Amendment) Bill 2022

By News

Over many years credit unions have operated within outdated legislation – legislation not fit for purpose in a modern era. For some time now, CUDA has called on the Government to introduce enhancements to the existing credit union legislation to ensure credit unions can reach their potential on behalf of their members.

Today, the Government has published a new Credit Union (Amendment) Bill. On behalf of its members and the credit union sector at large, CUDA welcomes this development. According to Kevin Johnson, CEO CUDA, “this unique opportunity will enable credit unions to offer and deliver more benefits through enhanced products and services to existing and future credit union members”.

Credit Union legislation was last overhauled 10 years ago by the Credit Union and Co-operation with Overseas Regulators Act 2012.

The published amendments will allow greater collaboration and choice when developing credit products and offerings to consumers such as sharing large community project loans amongst a number of credit union participants (“loan sharing” or “loan participation”), and the ability to offer a full range of services to consumers, irrespective of the fact that a credit union may not have that product themselves e.g. mortgages, by introducing the member to a colleague credit union that does offer the product or service (“loan introduction”).  These are standard practices amongst credit unions in other jurisdictions such as Canada.

CUDA particularly welcomes the changes that recognise the great work of volunteer directors, who provide a professional service pro bono. The changes will allow them to focus more on the overarching governance and strategic direction and policy making of the credit union, while allowing a credit union assign new roles, focusing on implementation and operations, to its professional management team.

There is no doubting the trust members place in their credit union. The relationship is unique. CUDA is pleased that the legislative changes will allow credit unions continue their special relationship with members and the community through environmentally friendly methods – including the introduction of digital enhancements to their existing services and facilitating additional loans to the community. However, CUDA is quick to note that credit unions are very aware of the importance of face-to-face interactions with their members. Something that is greatly diminishing in other areas of the banking.

CUDA commends the great work achieved by all stakeholders, noting that the process started out with interested parties having differing views and priorities. The pandemic brought an additional layer of complications. CUDA says that the published Bill is an example of what can be achieved through meaningful cooperation.  CUDA would like to take the opportunity to express its appreciation for the productive contributions of Minister of State, Séan Fleming TD, Minister for Finance, Pascal Donohoe TD, the team at the Department of Finance led by Brian Corr, the Registrar of Credit Unions, Elaine Byrne, and her team at the Central Bank, and our colleagues in CUMA, ILCU and NSF.

CUDA looks forward to the speedy implementation of the legislation to ensure credit unions can continue to deliver their first-rate service – ensuring the best outcomes for credit union members, their communities and the wider Irish economy.

Nov 30 2022

CUDA issues cautious welcome to the publication of the Retail Banking Review

By News

Speaking following the publication of the Report, Kevin Johnson, CEO of CUDA, stated that the Review has a welcomed focus on the interests of financial services customers and their communities, but we will need to see detail, such as the definition of terms like ‘reasonable access’, to determine how practical these proposals are.

It is good to see the recognition of credit unions as key players in providing real competition and value to retail consumers of financial services. However, a lot more detail and action is required to ensure the potential that credit unions have becomes a reality. The Credit Union (Amendment) Bill 2022, which is about to be published, needs to be enacted straightaway to facilitate credit union services to be delivered consistently across the country.

The Report sets out recommendations that will reduce the ability of providers of banking services to solely decide who should have services and who shouldn’t. We welcome this as current practice is not consistent with supporting the financial wellbeing of all in our society, and credit unions will continue to lead the way in ensuring that the interest of their consumers is the priority and hopefully others will follow that example.

It is also disturbing that a recommendation is needed requiring providers of retail banking products and services to set out and publish customer charters.

In a sector wide submission to the Credit Union Policy Review February 2021, we recognised the need for a long-term vision that is reflective of the unique role of credit unions and how they will improve the financial, social and environmental well-being of credit union members and their communities. It is encouraging that the Review Team state in this report their understanding that the Department of Finance and the Central Bank will engage constructively, developing new legislation, if required. Hopefully this will also extend to enhancements to credit union regulations.

CUDA looks forward to continuing to constructively work with all the members of the Credit Union Stakeholder Group to continue to improve the customer experience and value proposition that people can get from their credit union.

Nov 17 2022

CUDA Congratulates New Registrar of Credit Unions on her Appointment

By News

The Central Bank of Ireland has today announced the appointment of Elaine Byrne as the new Registrar of Credit Unions (CBI press release available here.)

CUDA CEO, Kevin Johnson stated ‘We have had the pleasure of working with Elaine in her role as Deputy Registrar for the past 16 years.  In congratulating Elaine on her appointment we very much look forward to a constructive and positive engagement with her and her team.  Elaine takes on the important role of Registrar at an incredibly busy time for credit union regulation, an agenda that includes implementation of the outcomes from the Credit Union Policy Review, role of CUs in the Consumer Protection Code review, impacts of the Individual Accountability Framework, business development initiatives, role of credit unions in the Retail Banking Review, various EU / EBA directives as well as our ongoing work on capital and liquidity requirements for credit unions.