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CUDA welcomes the publication of the ICURN report

By News

CUDA welcomes the publication of this awaited ICURN peer review report. It contains several key recommendations which the Regulators Network believes will improve the effectiveness of compliance within credit unions. We note that the report considers the financial performance of credit unions up to year-end 2022, and therefore does not have the benefit of the improvements achieved in 2023.

From our initial read of the report, we welcome suggestions calling for the CBI to update aspects of the Credit Union Handbook related to operational risk, fraud reporting requirements, and increase engagement with credit union boards and staff on risk management practices.

We particularly welcome the suggestion for further development of the Regulatory Framework to accommodate the growing diversification of credit union business lines, provided credit unions demonstrate the necessary capability and competence. This involves acknowledging and supporting the expanding roles and services offered by credit unions while ensuring they remain within a safe and sound operational framework.

The report notes that the CBI “remain of the view that there is no rationale to change to a risk weighted approach” for determination of capital which is disappointing and this ties up excessive capital. That said we look forward to working with the CBI on their ongoing lending framework review and the associated liquidity regulations. CUDA maintains that a ‘One size fits all’ regulation approach damages both large and small Credit Unions, a new model is required for the sector to sustain and achieve its full potential.

CUDA comments on CBI Financial Conditions of Credit Unions Report

By News

Commenting on the ‘Financial Conditions of Credit Unions’ report, published by the Central Bank this morning, Kevin Johnson, CEO of CUDA (Credit Union Development Association) said “This morning’s report shows that lending is strong across the credit union sector, with a 12pc increase in loans for the financial year ended 30 September 2023. Loan growth has continued into 2024 and this is reflective of the huge demand for credit union loans and the increased ability of credit unions to meet this demand across multiple channels. Furthermore, thanks to legislative changes signed last February, we expect the scale of credit union lending to significantly increase in the coming months and years – because from September 2024, for the first time, credit unions will be able to 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. As a result of these changes, CUDA contends that total new credit union mortgage lending could reach €1 billion per annum by 2027, which could put credit unions in the top five mortgage lenders.

Furthermore, the Credit Union Regulatory Lending Framework review is ongoing in the Central Bank at present and is due to be published by the end of June. On foot of this review, we would hope going forward that further changes will be implemented which will permit credit unions to lend more.

While after falling to a seven-year low the last time this report was published[1], the slight increase in arrears captured in this morning’s report is a sombre reminder of the pressure that the increased cost of living has brought on people. Credit unions are very cognisant of this and continue to remain supportive of anyone who is experiencing difficulties.  We believe the low increase is testament to the competitive interest rates available from credit unions as well as the work that credit unions do with any customers who may run into difficulties repaying their loans.

This morning’s report also shows that there’s been an increase in reserves across the sector, with all credit unions reporting regulatory reserves that are comfortably above the required regulatory minimum. This is evidence of prudent financial management by credit unions – which in turn underpins member confidence and enables credit unions to expand on their service offerings and continue to win more of the mortgage and lending pie from the Irish banks and non-banks alike.”

 

ENDS

 

[1] As per Financial Stability Report for financial year to 30 September 2022, published in March 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.

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.”

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

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.

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.

 

Credit unions simply the best as they top annual rankings for eighth year in a row

By News

Following the announcement today by the CX Company of their annual Customer Experience survey, carried out on their behalf by Amárach Research, Kevin Johnson, CEO of the Credit Union Development Association (CUDA) stated …”It is a remarkable achievement for credit unions to maintain their position in the number one spot for an amazing eighth year. Credit unions have topped the poll every year since the CX Company survey started back in 2015.

Membership has grown consistently over that period and the credit union brand remains the most trusted in Ireland as they continue to deliver the best consumer experience in the country.  Credit Unions have significantly modernised in the past decade – their governance, product offerings, and service delivery methods have advanced considerably.  Members can still access the traditional set of personal loans and savings, and now they have mortgages, current accounts, ‘one stop shop’ retrofit loans, revolving credit, community loans, agri loans and loans for small businesses.  These are accessible face to face, over the phone or via online facilities.

Credit Unions excel in Customer experience and the CX framework is a useful way of measuring what is embedded in their DNA. So it’s not just the member-engaging staff, it’s the teams that support these staff and the great culture that’s driven from the volunteer Boards of Directors.”

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.’