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Dec 31 2024

New rules will allow all credit unions to make mortgage offer

By News

Landmark regulatory changes coming in during 2025 will mean every credit union in the country will be able to offer mortgages, business loans, current accounts and debit cards.

The changes are coming about due to the enactment of the Credit Union (Amendment) Act 2023, a piece of legislation that is set to transform the sector, according to Helen Carbery, the new chief executive of the Credit Union Development Association (CUDA), a representative body for the lenders.

She said: “We are at a landmark moment in the evolution of the role and value of the credit union sector in Ireland.”

The regulatory changes for credit unions coming in under the Credit Union (Amendment) Act 2023 was one of the most important pieces of credit union legislation to ever be developed, she said.

It will transform the whole credit union landscape, she added.

“It is thanks to this new legislation that for the first time ever, all credit unions will be able to offer a service or product such as a mortgage to a member of another credit union, under a formal arrangement with that other credit union.”

This effectively means that every credit union in the country will be able to offer mortgages, business loans, current accounts and debit cards.

Ms Carbery said smaller credit unions will be able to offer these services by essentially partnering with other credit unions or through credit union shared organisations.

“Importantly, the legislation enables credit unions to maintain their independence and uniqueness while they partner with others to provide the services needed by their members,” she said.

The act also modernises governance structures and reduces operational burdens on volunteer boards to enable credit unions to play a more active role in areas such as housing, SME lending, and environmental sustainability. The Credit Union (Amendment) Act 2023 also introduces the concept of the corporate credit union.

Often described as a central credit union or “a credit union for credit unions”, a corporate credit union would support collaboration between credit unions, and enable them to better manage their resources and expand their lending capabilities, she said.

Ireland is not alone in grappling with how to regulate a diverse credit union sector. In countries such as Canada and Australia, regulatory systems have successfully enabled credit unions to thrive while ensuring appropriate oversight, Ms Carbery said.

The next phase of the implementation of the Credit Union (Amendment) Act 2023 includes the drafting of new regulations for the development and operation of a corporate credit union by the Central Bank of Ireland.

This will be done in consultation with the credit union sector.

“This is a very exciting development in the year ahead as it could pave the way for credit unions to gain greater access to funding and more opportunities to expand their offerings.”

Ms Carbery has just taken over as head of CUDA following the retirement of Dr Kevin Johnson from the role.

In her recent speech at the Credit Union Annual Conference in Killarney, the outgoing deputy governor of the Central Bank, Sharon Donnery, said the focus should allow it to seize the opportunities that the various credit union regulations have presented.

Ms Donnery said that since 2014, the number of credit unions overall has halved and the number of large credit union has more than doubled. Total assets in the sector have grown by 50pc from €14bn in 2014 to just over €21bn in 2024.

She said credit union reserves have strengthened over the last decade and total loans have grown by 73pc in the same period.

Ms Carbery said to increase their loan book, the credit sector is focused on how to remain relevant to their communities with useful and attractive offerings.

Nov 21 2024

CUDA Urges Political Parties to Abolish DIRT on Savings Below €10,000 to Promote Financial Resilience

By News

As Ireland approaches the general election on November 29th, 2024, the Credit Union Development Association (CUDA) is calling on political parties to commit to abolishing Deposit Interest Retention Tax (DIRT) on all savings below €10,000. CUDA argues that this change would encourage a culture of saving, particularly among low- and middle-income households, and align with government goals of promoting financial responsibility and reducing reliance on debt.

Speaking ahead of the election, Kevin Johnson, CEO of CUDA, said:
“Removing DIRT on modest savings balances is a simple yet effective policy to incentivise saving and help people build financial resilience. For many low- and middle-income households, this could mean the difference between relying on high-cost credit during emergencies or having a financial safety net in place.”

Encouraging a Savings Culture

Credit unions, which play a vital role in fostering financial responsibility, offer competitive savings rates that already benefit communities across Ireland. And while there has been much talk about the savings offerings from some overseas providers, many Irish credit unions offer strong rates on deposit savings..  Dividend payments are also on the increase with many credit unions expected to declare higher rates at their AGMs in December and January.

Removing DIRT on savings below €10,000 would amplify these benefits, particularly for low- and middle-income earners.

CUDA estimates the cost to the Exchequer to abolish DIRT on modest savings would be approximately €18 million annually, based on current deposit levels. However, this cost would be outweighed by the societal benefits of a stronger savings culture, reduced reliance on state supports during financial crises, and the promotion of long-term financial stability for households.

A National Need for Financial Resilience

As interest rates have risen, Irish savers are finally beginning to see better returns on their deposits. However, the 33% DIRT tax disproportionately impacts those with smaller savings, making it harder for them to accumulate wealth or build financial security.

“Low- and middle-income savers are penalised for their prudence under the current system and we are very cognisant of the high number of people who do not have an emergency or ‘rainy day’ fund,” said Johnson.
“By abolishing DIRT on savings below €10,000, the government can help these households build financial stability while encouraging others to begin saving. It’s a practical solution that supports the national goal of fostering financial responsibility and reducing reliance on debt.”

A Broader Economic Impact

CUDA’s proposal aligns with ongoing efforts to boost financial literacy and savings habits nationwide. Recent government data highlights a rise in savers benefiting from energy efficiency grants and other schemes, underscoring the public’s willingness to save when incentivised.

Additionally, as credit unions continue to provide competitive deposit offerings, abolishing DIRT would help them play an even greater role in supporting their members’ financial wellbeing. This initiative would not only assist individual households but also contribute to Ireland’s broader economic resilience.

A Call to Action for Political Parties

CUDA is urging all political parties to prioritise the abolition of DIRT on savings below €10,000 as part of their election manifestos and commit to its implementation in the next Dáil.

Kevin Johnson concluded:
“The benefits of this proposal are clear. It would encourage prudent financial behaviour, reduce reliance on debt, and promote economic resilience, particularly for those on low and middle incomes. As we approach the general election, we hope all political parties will recognise the value of this initiative and support its inclusion in their plans for government.”

 

A full copy of the CUDA General Election Manifesto is available here.

ENDS

Notes to Editors:

  • Deposit Interest Retention Tax (DIRT) is currently charged at a rate of 33% on all interest earned on deposits.
  • Credit Union Development Association (CUDA) represents progressive credit unions across Ireland, supporting them with a strong voice, leadership, and practical solutions that enhance their strategic and operational capabilities.