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
- Proposal to recognise Credit Union Service Organisations (CUSOs) in the Credit Union Act as authorised investments;
- 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
- Proposal on the referral of members to allow for the introduction of members to other credit unions to access other services/products;
- Proposal to allow credit unions to engage in loan participation lending;
- Proposal to allow for credit unions to lend directly to certain classes of public bodies;
- Proposal to ensure that clubs, societies, and companies based in a common bond are members;
- Proposal to make an annual report available to members electronically, e.g. via the credit union website;
- 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.
- Proposal to enhance the role of the CEO in relation to the board by allowing flexibility to add the CEO as a board member;
- Proposal to amend the minimum number of board meetings from ten to six;
- Proposal to allow greater flexibility in requirements to review policies from an annual basis to every three years;
- Proposal to allow the Board to delegate loan rejection appeals to the executive team;
- Proposal to amend the language in legislation related to the responsibility for approving loans and membership – this will facilitate the use of modern technologies.