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Feb 21 2024

Comment from Dr. Kevin Johnson, CEO of the Credit Union Development Association (CUDA), on key changes coming into force today February 21, 2024 as a result of enhancements to the Credit Union Act

By News

Credit unions processed approximately €200m in new mortgage lending in 2023. As a result of the legislative changes which came into force today, we anticipate this volume doubling each year for the next couple of years. We believe the credit union mortgage lending could reach €1bn per annum within 3 to 4 years which could put credit unions in the top 5 mortgage lenders.

For the first time, credit unions can now offer a service or product such as a home loan to a member of another credit union – under a formal arrangement with that other credit union. For householders and aspiring homeowners, this means there will be greater access to fairer mortgages as credit unions will be able to refer mortgage applications to other credit unions should they not be in a position to provide a mortgage themselves. This effectively means that every credit union in the country will be able to offer mortgages.

Credit unions can also refer applications for other products to another credit union – such as current accounts, debit cards, and business loans. Credit unions can now essentially partner with other credit unions to offer their members a wider selection of products.

This new collaboration on lending could generate an additional €2.2bn in lending each year for credit unions.

Credit union members will have more access to digital and automated services as a result of the enhancements to the Credit Union Act. This increased digitalisation will generate cost savings for credit unions in a number of areas. For example, the ability to make credit union annual reports available online will save credit unions an estimated €75m a year in postage and printing costs (see Appendix). All of these cost savings will then be used to deliver even better and lower-cost products to our members.

In addition, increased digitalisation will make it easier for credit unions to sign up new business members, and lend to these businesses– in this regard, we estimate that digitalisation will boost business lending alone by €100m a year.

The changes that come into force today (February 21, 2024) are just the first of a suite of enhancements to the Credit Union Act in the pipeline. Other changes in the pipeline are the establishment of credit unions for credit unions (aka Corporate Credit Unions) and the ability of credit unions to invest in shared services – these will help credit unions provide maximum efficiency for their members by sharing costs and expertise. This in turn will enable credit unions to offer a wider range of lower-cost loans and other products to their members, as well as more favourable returns on savings.

ENDS

 

Appendix

 

 

 

 

Oct 18 2023

CUDA welcomes the passing of the Credit Union (Amendment) Bill at Committee Stage

By News

Mortgage volumes to double each year and SME services to be available across the sector

Commenting as the Credit Union (Amendment) Bill passed at Committee Stage, Kevin Johnson, CEO of CUDA which works with 50 credit unions, said

”At a time when there is a significant housing challenge, a climate change crisis, a looming pension crisis and large-scale bank branch closures, CUDA believes that the Credit Union (Amendment) Bill will immediately deliver increased finance options for individuals, small businesses and for community organisations.

The new proposals will facilitate real collaboration between credit unions. Each credit union is a separate legal entity with its own board and management team, and up to now, they are not permitted to share business. These changes will permit credit unions to collaborate, introduce loans to each other and collectively share loans. They will be able to establish a credit union for credit unions and have greater opportunity to invest in credit union owned service organisations. These changes will help credit unions make a greater financial, social, and environmental contribution as their legislation framework is modernised.

For householders and aspiring homeowners, there will be greater access to fairer mortgages as credit unions will be able to refer mortgage applications to other credit unions should they not be in a position to provide it themselves. This effectively means that every credit union in the country will be able to offer mortgages. Credit unions will process approximately €200m in mortgages in 2023. Following the enactment of this legislation, we anticipate this volume doubling each year for the next couple of years. While the average mortgage interest rate across banks has increased significantly, it has actually decreased across the credit union sector.

For local community organisations seeking larger loans, there will be more access to affordable finance options as their local credit union will be allowed to co-lend and share loans with other credit unions.

For small business owners, it will be a lot easier for the business itself to qualify to become a member of a credit union and therefore access the ever-increasing range of products and high-quality award-winning personal service.

For all credit union members, the changes will allow greater digitalisation of activities to complement the renowned face-to-face personal service.

For the credit unions themselves, they will be able to invest in shared services and establish credit unions for credit unions – this will help provide maximum efficiency for their members by sharing costs and expertise.

Allowing credit unions to do more business through these changes, could effectively see their lending double, increasing to over €10bn.

We extend our sincere appreciation to both Minister Jennifer Carroll-MacNeill and her predecessor Minister Sean Fleming for their invaluable support and significant contributions in helping advance the credit union mission”.

Amendments to Credit Union legislation

Supporting investment in collaboration

Enhanced collaboration is central to the future of the credit union movement

  1. Proposal to recognise Credit Union Service Organisations (CUSOs) in the Credit Union Act as authorised investments;
  2. Proposal to introduce Corporate Credit Unions as entities through which credit unions can further collaborate.

Improving members services

Enhancing the Common Bond to ensure members can access the fullest range of services

  1. Proposal on the referral of members to allow for the introduction of members to other credit unions to access other services/products;
  2. Proposal to allow credit unions to engage in loan participation lending;
  3. Proposal to allow for credit unions to lend directly to certain classes of public bodies;
  4. Proposal to ensure that clubs, societies, and companies based in a common bond are members;
  5. Proposal to make an annual report available to members electronically, e.g. via the credit union website;
  6. Proposal that every credit union publish a digital map or provide a description of their common bond on their website and in their annual report,

Supporting improvements in Governance

Enhanced governance to enable boards to focus less on operational matters and more on strategy and business models.

  1. Proposal to enhance the role of the CEO in relation to the board by allowing flexibility to add the CEO as a board member;
  2. Proposal to amend the minimum number of board meetings from ten to six;
  3. Proposal to allow greater flexibility in requirements to review policies from an annual basis to every three years;
  4. Proposal to allow the Board to delegate loan rejection appeals to the executive team;
  5. Proposal to amend the language in legislation related to the responsibility for approving loans and membership – this will facilitate the use of modern technologies.
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 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.

 

Sep 06 2022

Just 6% believe banks will retain cash services “indefinitely”

By News

Majority believe that buck stops with Government and Central Bank for cash-banking in local communities

 Despite the public and political backlash to the recent attempts at branch closures and the withdraw of cash services by AIB, the vast majority of people believe that it’s only a matter of time before local banking services, including cash, are significantly curtailed.

A new survey, commissioned by Credit Union Development Association (CUDA) and undertaken by iReach, reveals that as many as 60% anticipate that cash services in banks will be removed in time, with just 6% believing banks will retain these services indefinitely.

The survey of 1,000 people nationwide also found that over half (56%) believe that the responsibility to retain cash services should be centrally positioned in the hands of the Government and/or the Central Bank.

Kevin Johnson, CEO of CUDA spoke of the findings,

“It seems that many people feel we are on borrowed time in terms of the rollout of digital banking and the withdrawal of face-to-face banking services, with 60% of respondents feeling that AIB’s decision to retain cash services is only temporary.

Just 6% of respondents believe that cash services as they currently exist will survive indefinitely, with a further 15% feeling that while they believe cash services will be retained, we will have to pay a lot more for them.

It is very much a sign of the times we are in, and the shift to digital banking, that one of the fundamental purposes of the banking system as we know it – namely the circulation of cash – is under threat of becoming redundant. There are many sides to the argument – some people will argue that digital is the way forward and a cashless society is the next logical step. Others will maintain that a solely digital-based banking system would only serve a certain sector of society, would skip a large swathe of people who don’t have the requisite skillset to adopt it, and leave the economy over- exposed to a major cyber-attack.”

Recent statistics from Eurostat1 found that there are 275,000 people in Ireland over the age of 65 who are not using the internet.

Mr Johnson commented,

“That’s a hugely significant demographic and sector of our society. Most of these people require access to banking services and expressly, to cash banking services and a walk-in branch. The prospect of national banking service providers orientating their business development in such a way as to potentially disempower over a quarter of a million people requires serious consideration at Government level, and requires policy making that mitigates such negative societal impacts and detriment – particularly for older consumers.”

The CUDA survey also questioned respondents as to who they feel responsibility to ensure that local communities retain access to cash-banking should fall to, with a third believing that it should remain the responsibilities of the banks to retain services.

 

 

 

Mr Johnson continued,

“Here we see that the majority (56%) believe that the buck stops with the Government and the Central Bank to ensure that people have access to cash banking services in their local communities. A further 30% believe that it’s up to the banks to ensure that local communities have such services.

These numbers are even more extreme amongst KBC and Ulster bank customers, with just 17% believing that it’s up to the banks and 72% saying that it’s up to Government and the Central bank to sort this issue.”

Mr Johnson concluded,

“The retention of cash services in local communities is critical and is a national issue that needs forward-looking centralised planning. In this regard, Credit unions would be happy to support the Government in developing a solid solution to ensure that consumers current and future needs are met.”

 

 

1 Eurostat: Individuals’ level of digital skills (until 2019) https://ec.europa.eu/eurostat/databrowser/view/ISOC_SK_DSKL_I/default/table?lang=en

 

ENDS

Note to the Editor

CUDA

CUDA, the Credit Union Development Association, was legally incorporated in 2003. In its early days, it acted as the representative voice for owner member Credit Unions, with legislators and regulators. The organisation has since evolved and in addition to providing a ‘voice’, has become increasingly engaged in providing support facilities in the areas of regulatory compliance, risk management, shared services and competency development.

CUDA is a Credit Union owned network that enables member Credit Unions to engage in beneficial activities which would not have proved possible to do as single stand-alone entities.

It manages the diverse interests of members to the mutual benefit of the network. In acting as a catalyst for the growth and development of Credit Unions, CUDA now makes many of its support services available to all Credit Unions.

 

 

Appendix

  1. AIB recently announced plans to remove cash services from 70 of its branches throughout the country. It has since reversed this decision following backlash from the public and Government.

Do you believe this reversal is:

  • Permanent – they will retain cash services indefinitely 6%
  • Permanent – they will retain cash services indefinitely but will increase their charges for cash transactions 15%
  • Temporary – they will remove cash services in time 60%
  • I don’t know 19%

 

  1. In your opinion, whose responsibility is it to ensure that local communities have access to cash-banking?
  • The banks– they should look after their customers 30%
  • The Government – to ensure that banks or an alternative provides this service 28%
  • The Central Bank – to ensure that banks or an alternative provides this service 28%
  • Nobody – we just have to move with the times 13%

 

 

 

Mar 10 2022

Credit Union bodies welcome engagement with Minister Fleming on proposals contained in Department of Finance Review of Credit Union Policy Framework

By News

The four credit union representative bodies – CUDA, CUMA, ILCU and NSF – met with Minister with responsibility for Credit Unions Seán Fleming and officials from the Department of Finance today, Thursday 10th March. At the meeting the Minister outlined a list of proposals contained in his Review of the Credit Union Policy Framework.

The proposals were summarised under five key objectives;

  • Objective 1: Recognition of Role of Credit Unions
  • Objective 2: Supporting Investment in Collaboration
  • Objective 3: Supporting Governance
  • Objective 4: Improving Member Services
  • Objective 5: Transparency of Regulatory Engagement

Minister Fleming spoke about the importance of credit unions growing their loan books and proposed a number of measures to assist credit unions in this regard. In particular, he proposed bringing forward legislation to enable credit unions to invest more easily in Credit Union Service Organisations (CUSOs). This would allow credit unions to pool their resources in delivering new loan products to their members such as mortgages and small business loans.  They will also be enabled to establish Corporate Credit Unions to facilitate mechanisms such as a central liquidity system.

The Minister also proposed a number of measures to allow credit unions to introduce members to another credit union where the referring credit union was unable to provide a certain loan product or service. He also proposed legislative change to allow credit unions to share a larger loan between them.

In relation to Governance, Minister Fleming recognised the important role volunteers play within credit unions, and has proposed that this be included in legislation. Further proposals would reduce the work load on volunteer Directors and Board Oversight Committees in the future.

Also included in the measures outlined by the Minister were proposals aimed at making regulatory engagement with credit unions more transparent through the establishment of a Service Level Agreement (SLA) between credit unions and the Central Bank.

Responding to the Minister’s proposals, the four representative bodies welcomed the opportunities for lending for credit unions. However, there was general consensus that the proposals do not go far enough in addressing the key area of regulatory engagement. They recommend strengthened formalised structures that would include the four bodies, the Central Bank and the Department of Finance. This key infrastructure would serve to identify existing barriers to lending and prevent future impediments to progress and service to members and communities. The bodies believe that further engagement in this area is needed.

Feb 08 2022

CUDA Welcomes Government Announcement on Home Energy Upgrades

By News

Welcoming the announcement by Government today, Tuesday 8th February, in relation to Home Energy Upgrades,  Kevin Johnson, CUDA (Credit Union Development Association) said:

“This is a fantastic development for the homeowner and not ahead of time. The grants are designed to support “one stop shops” for homeowners, which is exactly what is needed. CUDA along with its partner Retrofit Energy Ireland (‘REIL’) were first to introduce this grant format to the retrofit market back in 2019, and the high demand from homeowners was immediately evident.

The grant, coupled with the access to finance, the savings that will be made, and the provision of retrofit experts all in one place takes the concern and reticence away from homeowners who are keen to make their home more energy efficient.

We are glad to see the Government are taking a long-term approach to this, with a commitment to fund the schemes over the next decade – this is something we have been campaigning for several years now. ”

Pro Energy Home Scheme was piloted by CUDA in 2019

“From dealing with members, credit unions have become increasingly conscious that many struggle to improve the energy rating of their home and successfully apply for the available grants. It became abundantly apparent that a simple end to end service model was badly needed. The ProEnergy Homes Scheme was piloted by CUDA in 2019, and rolled out on a limited basis during that summer. It was quickly oversubscribed. Demand from credit union members through the initial 25 participating credit unions generated over 1,100 enquiries from credit union members over a short space of time.

The initiative took all the “leg-work” away from the homeowner. All they had to do was fill out an application form, after which REIL will conduct an assessment on their property and present them with a report. 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. Credit unions have advanced tens of thousands of members with home improvement finance over the past year and increasingly, achieving a warmer and more efficient home is top of the agenda for our members. ”

Further information on the ProEnergy Homes Scheme can be found here

 

 

Jan 19 2022

Central Bank Consultation – Application of Minimum Competency Rules to Credit Unions

By News

The Central Bank of Ireland has today (19 January 2022) commenced a public consultation on the application of the Minimum Competency Code 2017 and the Minimum Competency Regulations 2017 to credit union core services.

Commenting on the consultation, Kevin Johnson CEO of CUDA (Credit Union Development Association), stated ‘Credit unions have fully embraced the process of business innovation as evidenced by the fact that two-thirds of credit union staff now hold CUA and/or QFA  (Credit Union Advisor, Qualified Financial Advisor).

Many people not familiar with the sector may be surprised by the level of change that has occurred across credit unions with increased digital access, a wider range of lending products including mortgages and small business loans right through to special services like the end-to-end home retrofit scheme which has proven so popular.

Credit unions are still the recognised as the most trusted brand in the country and this is a direct consequence of how they treat people – with compassion and understanding.

During 2021, CUDA’s own Credit Union Director Programme focused on supporting directors across the country to develop key skills to better understand today’s more complex banking world and to enable them to deliver the most appropriate products and services to their members.’

Nov 21 2019

New lending rules will finally allow Credit Unions to compete

By News

Survey – 3 out of 4 (77%) Consumers believe Credit Unions should compete more aggressively with Banks

  • Some credit unions poised to double or triple loan book size as a result of rule changes to longer-term loans
  • Credit unions disappointed at limited permission to become a key business loan provider and to support Government Housing Schemes

CUDA believes that the new rules which aligns the volume of loans a credit union can issue to their asset size is fundamental, and could enable many credit unions to double or treble their lending in certain loan classes.

Credit unions can and should ‘take on the banks’, according to more than 70% of Irish adults in a recent survey, commissioned by CUDA and conducted by iReach. The majority (74%) of adults believe that credit unions could make a bigger impact and should collaborate to compete with the banks.

Kevin Johnson, CEO of the Credit Union Development Association (CUDA), commenting on the new rules issued by the Central Bank of Ireland today, said  “Up until now the level of loans the credit union should give out was based on the percentage of loans already issued. This was holding credit unions back from providing more loans to support their members and their communities. Now the volume of loans will be based on a percentage of assets of the credit union. With an average of just 28% of assets currently lent out, the Regulations will allow many credit unions to do more loans for more people.

CUDA has persistently lobbied for these changes since 2015 and are delighted that these changes will bring much needed competition to the market for mortgages, home renovations and business loans”.

“We look forward to providing the wider range and higher volume of loans now permitted under the new rules and welcome the Regulator’s commitment to re-evaluating these limits as the sector evolves in these areas of lending. In particular CUDA believes credit unions are ready and willing to help do more in filling the void for business loans left by the banks”.

Kevin Johnson went on to express disappointment that credit unions will be prohibited from supporting aspects of Government Housing Policy such as the Repair and Leasing Scheme. There is no logic, he said, to prohibiting credit unions from providing much needed loans to their members who want to help rebuild Ireland through the Repair and Leasing Scheme. Kevin further expressed disappointment with the limit on the number of business loans a credit union can do in a time when many credit union members who are small businesses are crying out for funding.

CUDA is committed to getting solutions to these issues and will speak directly with the Department of Finance, Department of Housing and the CBI on these matters.

Kevin concluded, “It’s very encouraging to find that 59% of people aged between 18-34 either agreed or strongly agreed with the perception of credit unions being ‘dynamic and innovative’. We have made huge effort and investment in recent years to develop our work in line with advances in technology through our innovation hub, the Solution Centre. In the past three years we have introduced new lending products and these new limit rules from the Central Bank will allow us help credit unions further develop. Our Digital Marketing adverts reached 2.74m people so far in 2019, creating over 18,000 loan leads with a value of €102m. We are committed to broadening the appeal and relevance of the credit union movement among younger generations, and to making our services as accessible as possible, to as many members as we can, both old and new.”

-ENDS