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credit unions

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

By News

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

By News

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

By News

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

By News

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

By News

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”.

COVID-19 Update

By COVID-19, News

CUDA, and our Member Credit Unions, are following the COVID-19 developments very closely. We continue to monitor the latest advice from the Government and from the HSE, and want you to know that we have plans in place to ensure members continue to be able to access the services they need.

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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

 

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

By News

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

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

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

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

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

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

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

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

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

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

Kevin Johnson

Chief Executive Officer

Credit Union Development Association