The credit union sector is overburdened with regulatory restrictions and limitations, which is stifling its growth potential.
That is according to Fianna Fáil finance spokesman Michael McGrath, who was commenting on new figures showing that there are 189 credit unions operating with lending restrictions with fewer than 10%, or only 18, allowed to lend €40,000 and more.
“The sector can only thrive 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. The manner in which legislative changes have been implemented has disadvantaged credit unions and given a competitive advantage to the banking sector.
“There is the potential for further relative weakening of credit unions from the current consultation process under way by the Central Bank. This is contrary to the interests of consumers, particularly those who have limited access to lending facilities from banks.”
He was commenting after Finance Minister Michael Noonan confirmed in a written Dáil response that it has cost over €31m to bailout three credit unions.
The Central Bank-established Credit Institutions Resolution Fund has paid out €27m in respect of Newbridge Credit Union; €2.15m in relation to Howth Sutton Credit Union and €2.15m in relation to Killorglin Credit Union. Credit unions are contributing to the resolution fund in the form of a levy.
In relation to the loan restrictions, five credit unions have loan limits up to €39,999; 111 up to €29,999; 50 up to €19,999; and five up to €9,999.
Article Source: http://tinyurl.com/kbwqb42