Tag

credit unions

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

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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.’

Central Bank of Ireland’s Update on Financial Condition of the Credit Union Sector

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The Central Bank today (14 December) published its eighth edition of the Financial Conditions of Credit Unions Report. The report provides an update on the financial performance and position of credit unions, to inform credit unions and provide input for boards as they undertake their own strategic analysis and decision-making.

Commenting on the Central Bank of Ireland’s update on the financial condition of the Credit Union sector, Kevin Johnson CEO of CUDA (Credit Union Development Association), stated

“As seen in the report credit unions have the funds and the market reach, and we are delighted to see the breadth of services now available from many of them. The credit union movement could play a more active role, within their respective communities, in supporting housing association ownership, home ownership and retrofitting through sustainable and prudent lending, particularly as banks continue to reduce their presence in local towns and villages across the country. While credit unions have invested heavily in their digital capabilities in recent years to meet the convenience needs of many consumers, they have not abandoned those, of all ages, that prefer the face-to-face customer experience, whether it’s a simply transaction or a complex query.

The sector can only achieve its potential though continuing with their business model change, and this has to be enabled by an appropriate legislative and regulatory framework. Given the right structure, this could increase from current level of €5.25bn to €10.5bn.  We are constructively engaged in the Government Policy Review process and look forward to amended legislation that will enable all credit unions and their members prosper.”

CXi Report – Credit Unions win for the 7th Year in a Row

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Following the announcement of Credit Unions winning for the 7th year in a row, Kevin Johnson, CEO of the Credit Union Development Association, commented…

‘As banks continue to reduce their presence in local towns and villages across the country, credit unions are winning both the hearts and heads of consumers who consistently appreciate and trust the credit union brand and are now moving their accounts and borrowing needs across in increasing numbers as banks branches close. Credit unions have been loyal to their communities for years and that loyalty is now paying off.

While credit unions have invested heavily in their digital capabilities in recent years to meet the convenience needs of many consumers, they have not abandoned those, of all ages, that prefer the face-to-face customer experience, whether it’s a simply transaction or a complex query.’

BoI branch closure decision may see consumers move to Credit Unions in many Irish communities

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Commenting on the Bank of Ireland branch closures, Kevin Johnson CEO of CUDA (Credit Union Development Association),

“Friday’s closures will be felt by consumers in up to 80 towns and villages throughout the country. While there is undoubtedly a move towards a more digital offering in the financial services sector, there are still a significant cohort of people who are not ready to make that change. The migration of banks to self-service branches has been a difficult transition for many people – particularly older customers, many of whom still favour face to face interaction. However, today has taken this migration one step further, with people in the affected locations no longer being given even a self-service option.

While Credit Unions have made great strides in terms of digital developments, the community ethos means than maintaining a high-profile local community presence is integral for the movement. As with Ulster Bank’s planned exit, we believe the announcement today will drive more and more people across the country to becoming members of their local Credit Union so that they can avail of traditional banking through both digital and face to face means, a pattern we’ve seen in other countries including Canada and the USA.”

 

Transfers of Engagements:  A ‘Learning’ Model – CUDA & CU CEO Forum

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This paper is the product of a joint initiative between the Credit Union Development Association (CUDA) and the Credit Union CEO Forum. The paper offers unique insight to the lessons that emerge during the transfer of engagements process from the perspective of three stakeholder groups, namely the ‘Board of Directors & CEO’, ‘Regulator’ and ‘Members’. These insights are gathered from published research, the authors’ experiences and their conversations with CEOs who have participated in multiple transfers of engagements.

Method

Twenty-six transfer of engagements lessons are documented. A majority of these lessons are acquired by the ‘Board of Directors and the CEO’, next by the ‘Regulator’ and last by ‘Members’. This is reflective of the effort contributed by the respective parties and the proportionality of responsibility they have in the transfer of engagements process.

A ‘learning model’ is constructed to guide the creation of ‘strategic’ transfers of engagements. The imperative that emerges is that the Board of Directors and CEO (of transferee Credit Unions) have a vision and purpose of what they seek to achieve from a transfer of engagements for their members. Critical to this is an understanding of what members really value.

Recommendations

  • A more streamlined and less costly transfer process should be put in place by the Regulator, particularly where the transferor is small in asset size and the transferee has a breadth of transfer experience.
  • The Regulator should introduce a risk categorisation of Credit Unions, similar to the CAMEL grading mechanism, this would create a greater understanding of each Credit Union’s strengths and weaknesses at the outset of transfer of engagements discussions.
  • Member Resolution for the transfer of engagements should occur prior to Credit Unions embarking on the lengthy and costly due diligence, business planning and integration planning phases of the transfer process.
  • A significant exposure for transferee Credit Unions exist during the period from completion of the due diligence to the completion of the legal and regulatory process. As a solution, the authors suggest the implementation of a process whereby the transferee Credit Union has approval input in situations where such exposures could potentially occur, for example via a Heads of Agreement mechanism.
  • The Regulator should commence a review of loan category limits. Future transfers are likely to create Credit Unions of significant scale whose business model could be hampered by existing lending limit.

The Paper can be downloaded here.

CUDA’s Standing Orders Podcast series is specially designed to inform and support member credit unions.   In this episode, Peter is joined by Donal McKillop, Professor of Financial Services at Queen’s University Belfast, and Chair of the Credit Union CEO Forum, and Kevin Johnson, CEO of CUDA.

They talk about the experience of mergers across the sector and the structural options going forward. Donal and Kevin, with the assistance of others in the sector, have researched and analysed the successes and learnings of mergers over the last five years and have recently produced a paper on the subject titled, ‘Transfers of Engagements: A ‘Learning’ Model’.

Standing Orders Podcast can be streamed directly from CUDA’s website at the link here or is available on all the usual podcast channels including Apple, Spotify and Google Podcasts, where you can subscribe to get notified when new episodes become available.

 

Credit Unions and CUDA back New Fund to deliver 10,000 new homes

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CUDA and Initiative Ireland announce approval of new Fund, which aims to lend €600m to Approved Housing Bodies, to support delivery of 10,000 new homes over 10 years

Up to 100 Credit Unions across the country are expected to participate in the first Credit Union backed house-building fund which is anticipated to deliver 10,000 units over the next 10 years. CUDA first entered into a partnership with Initiative Ireland in August 2020 to establish a new Fund that would lend to Approved Housing Bodies (AHBs), with the goal of supporting the delivery thousands of much needed affordable and social homes. The Fund has now received final approval from the Central Bank enabling Credit Unions who have committed to the strategy, to now commence investment.

The new fund will enable Credit Unions from across Ireland to avail of regulatory changes which empower the Credit Unions to lend to Approved Housing Bodies through regulated funds. Initiative Ireland, which specialises in funding social and affordable housing developments nationwide, will act as an Investment Advisor to the fund, sourcing and managing projects with Approved Housing Bodies. CUDA, with membership of over 50 Credit Unions nationwide, which manage over €7bn in assets, shall support engagement with member and non-member Credit Unions as a sub-adviser to the Fund Distributor, with the expectation that the fund could lend over €600m to deliver over 1,000 new homes per annum.

Commenting on the announcement, Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Sean Fleming TD said,

I would like to commend the partnership between Initiative Ireland and the Credit Union Development Association which will see the delivery of thousands of social and affordable homes by our Affordable Housing Bodies. Since I became a Minister, it has been a personal priority of mine to facilitate Credit Union investment in large scale social housing projects. Credit Unions, which are an embedded in our towns and villages, are to become one of the key funders of new homes in so many communities across the country. I truly believe that the involvement of credit unions is absolutely appropriate and a watershed moment in terms of scaling up the delivery of homes for so many.”

Kevin Johnson, CEO of CUDA said,

“CUDA and Irish Credit Unions have been working on this development for some time and we are not surprised by the huge interest amongst Credit Unions. As a result, the Fund will be open to all Credit Unions regardless of whether they are CUDA members or not. Through this new fund, CUDA members will play a key role in supporting an increase in supply of much-needed housing nationwide. The fund will provide competitive finance to Approved Housing Bodies which play a key role in the delivery of social and affordable housing today. The Fund will offer an ongoing sustainable and affordable source of funding for Housing Bodies and enable Credit Unions to deploy considerable members savings into a conservative, sustainably managed strategy.”

 Padraig Rushe, CEO Initiative Ireland said,

“Initiative Ireland specialises in funding the delivery of private, social and affordable housing across Ireland, working with developers. Through the Fund, we can now also provide flexible and fast funding to Approved Housing Bodies to commission and acquire completed developments. Combined with our existing finance offering for developers, we can help to deliver a balance of private, social and affordable housing where it is most needed.”

Ireland’s Credit Unions on target to retrofit 2,000 homes in 2021

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Credit Unions secure grant funding support from SEAI for unique end to end survey and finance package

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

The Credit Union Development Association [CUDA], which currently runs Ireland’s first end-to-end home retrofit scheme – ProEnergy Homes, has partnered with Retrofit Energy Ireland (REIL) to secure grant funding support from the SEAI and has announced an expansion of the popular scheme, opening it up to all other credit unions.

CUDA report that, such is the demand from participating credit unions, half of the 2021 SEAI €1.5m in grant aid is already allocated, but as part the agreement, it is anticipated that additional funding will be sought in the second quarter.

The Pro Energy Home Scheme was first piloted by CUDA in early 2019 across 20 credit unions and was quickly oversubscribed. The scheme has proven popular as it takes all the “leg-work” away from the homeowner. Homeowners simply fill out an application form with their local participating credit union, after which REIL conducts an assessment on their property and present them with a report.

Kevin Johnson, CEO of CUDA explained why the scheme is so popular with homeowners,

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.

A national project management firm (REIL) is appointed to oversee all surveys and works, grant funding of up to 35% is available from SEAI for all qualifying works and low-rate financing is made available for the balance of costs through the applicant’s local credit union.  To-date public demand for the scheme through participating credit unions has been strong, demonstrating people’s appetite for a ‘one-stop-shop’ model.

Based on the current level of interest from credit union members and the number of credit unions signing up to the scheme, we’ll need to look for additional funding shortly and can envisaging the annual level of grant application running at €6m – €10m.”

According to Josephine Maguire of SEAI,

“The SEAI recognises that access to finance can be a barrier to residential retrofitting so we are pleased to once again support credit unions in delivering the ProEnergy Homes scheme that provides access to finance at competitive rates to their Members. The SEAI has supported the ProEnergy Homes scheme for a number of years and the one-stop-shop model has proven to be a case study for the delivery of residential retrofitting at the ambitious scale targeted in the National Climate Action Plan.”

Commenting on the partnership, Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Sean Fleming TD said “Credit Unions are uniquely positioned to support retrofitting plans in local communities across Ireland. I truly believe that the expansion of the ProEnergy Homes scheme, and similar schemes, will be a boost for local communities and will help the Government achieve its climate action targets.”

The Pro Energy Home Scheme model combines everything an applicant will need under a simple, unified process including an independent home survey report setting out their options, a dedicated project manager to arrange contractors, quality assurance on the works completed, access to low-rate credit union loans to finance the works.

CUDA say the scheme has now been tweaked slightly in response to the pandemic. Home surveys and works will resume as soon as it is safe to do so, but in the interim, a team of expert project managers and surveyors are available for telephone consultations with interested applicants. The ‘free and no obligations’ call-backs can be requested from www.proenergyhomes.ie and applicants will have the opportunity to discuss all their available options and receive professional advice on any technical questions they may have.

The average amount spent is about €14,000 made up of grant, savings and borrowings. The most popular measures undertaken in 2020 were external wall insulation, new glazing. Multi zone boiler controls also proved very popular. The scheme covers retrofits to a range of energy systems, including attic insulation, external wall insulation, the installation of solar panels, and upgrades to windows, among others.

Mr Johnson added, “Presently, SEAI grants will fund up to 35% of the cost of your retrofit. In our experience of running the scheme, the cost to the average household of bringing their home up to the recommended B2 level rating will cost approximately €30,000 – €40,000. So, just accounting for 35% of that cost through grant aid will leave a bill of roughly €26,000 for works. We recommend homeowners to use some saving to help lower the cost of any additional borrowing to cover the remaining bill, or indeed to cover the full cost of works, depending on how much they have saved. For example, take a cost of €40,000 to get a home to a B2 rating – the 35% grant will cover €14,000, which leaves €26,000 for the homeowner to cover. If they have €10,000 saved – this reduces the amount to be financed by a ProEnergy loan to €16,000.”

Mr. Johnson also welcomed the Governments clear commitment to supporting upskilling and job creation nationally as demand grows for retrofitting projects,

“As community organisations, credit unions are anxious to support local tradespeople. CUDA supports the Government’s announcement of four new centres of excellence to train 2,000 people in retrofit skills[1]. Upskilling existing tradespeople nationally will allow for job creation across the country and will support local economies while ensuring competition keeps prices and exchequer funding to a minimum.”

[1] https://www.gov.ie/en/press-release/16253-minister-harris-announces-four-new-retrofitting-centres-of-excellence/

BoI branch closure decision may see consumers move to Credit Unions in many Irish communities similar to other countries

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Commenting on the Bank of Ireland branch closures announced today, 1st March 2021, Kevin Johnson CEO of CUDA (Credit Union Development Association), said

“Today’s announcement will be felt by consumers in many towns and villages throughout the country. While there is undoubtedly a move towards a more digital offering in the financial services sector, there are still a significant cohort of people who are not ready to make that change. The migration of banks to self-service branches has been a difficult transition for many people – particularly older customers, many of whom still favour face to face interaction. However, today has taken this migration one step further, with people in the affected locations no longer being given even the self-service option.

While Credit Unions have made great strides in terms of digital developments, the community ethos means than maintaining a local community presence is integral for the movement. As with Ulster Bank’s planned exit, I believe the announcement today will drive more and more people across the country to becoming members of their local Credit Union so that they can avail of traditional banking through both digital and face to face means, a pattern we’ve seen in other countries including Canada and the USA.”

Rumoured exit from Ireland of Ulster Bank

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Commenting on Ulster bank’s rumoured exit, Kevin Johnson CEO of CUDA said, 

Consumers are going to be badly hit if Ulster Bank does exit the market; unlike other countries such as Canada and the USA, Irish consumers have been over-dependent on a couple of large national banks and as a country, we have traditionally underutilised local banking and credit options.

The level of development by Credit Union in recent years might surprise many.  The vast majority of them have substantially modernised their operations and they are now well placed to provide banking and credit facilities to the thousands of personal and business customers impacted. While well known for their range of personal loans, most now offer current accounts, business lending, mortgages, Agri-loans, home, life and travel insurances, with a growing number offering Ireland’s only end-to-end home retro-fitting package. Reliable and efficient online banking is now the norm and the uptake from members has been strong.

With strengthened governance controls and growing business lending expertise, CUDA on behalf of its owner credit unions, is currently in seeking the Minister for Finance to amend legislation so that allow credit unions can co-lend on larger property related and commercial loans.

While much of the business of any departing bank may end up with the two largest banks, credit unions are now well positioned to step in and fill much of the credit void left behind.

 

 

CUDA welcomes new Minister for State with specific Credit Union responsibility

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

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

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

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

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