Credit Unions Being 'Stifled By Excessively Bureaucratic Regulatory Regime'

Ireland's credit union sector is being stifled by an "excessively bureaucratic regulatory regime", Fianna Fáil has claimed.

The party's spokesperson, Michael McGrath, said the sector is not "fulfilling its potential" and is being stifled in its "ability to serve the needs of the community".

It is understood that currently credit unions have €4bn out in loans to members, which is said to be 30% of their available funds. It is thought that the sector has around €6bn available to lend.

However, Mr McGrath claims that 56% of credit unions are "subject to restrictions on their lending activity imposed by the Registrar of Credit Unions. These include both restrictions on the size of individual loans as well overall levels of lending".

He added: "The credit union sector has a proud tradition in communities throughout the country. With expert local knowledge and strong personal relationships, credit unions are able to make sound judgments about lending to individual customers, small businesses, the self-employed and farmers.

"While they have close to 3 million members overall, the reality is that the sector is effectively stagnant with the amount of its funds out on loan declining year after year. The sector can only make money if it is able to issue new loans. In too many instances, the ability of credit unions to do just that is being unnecessarily constrained.

"Credit unions have massively improved their regulatory framework in recent years with professionally qualified people amongst its employed and voluntary staff. The sector has improved its overall reserve ratio without resorting to the type of tactics employed by commercial banks who raised interest rates and charges at the expense of their existing customers. Credit unions are co-operating in shared service arrangements and implementing new regulatory and risk management systems. This needs to be reflected in removing some of the overly strict limits being placed on their lending activity. This will allow the sector to thrive and provide real competition to the banks. In so doing it can provide a major boost to local economies throughout the country."


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