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Review ordered of credit union sector
25 October 2009 By Ian Kehoe and David Clerkin
Finance minister Brian Lenihan has ordered the Financial Regulator to review the credit union sector to address issues such as rising bad debts and losses on risky investments.
The chairman of the Financial Regulator has received a request from Lenihan to carry out a root-and-branch review of the way the sector is regulated, and ensure that the stability of the credit union movement is preserved.
Among the areas that will come into the focus of the review are the fitness and qualifications of credit union directors and management, arrangements made by individual credit unions to ensure that they have access to sufficient liquid funds, and limits on commercial or non-consumer lending.
The minister has identified potential areas of concern that have arisen as a result of the economic downturn.
He will seek reassurance that the sector has sufficiently robust procedures in place to cope with threats to individual credit unions.
Lenihan had previously sought major changes to the way credit unions operated to focus attention on credit unions’ traditional core priority of protecting members’ savings.
The review is expected to touch on the potential for extending the current maximum limit on the duration of individual loans.
It is also likely to seek to harmonise the approach of all credit unions to becoming members of the Irish Credit Bureau, the banking industry body that collates and maintains data on individual customer borrowing and credit histories.
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