Credit unions fight to keep control of league's bailout fund
CREDIT unions are meeting this weekend in a bid to put a strategy together to stop the regulator for the sector taking control of a €119m fund owned by the League of Credit Unions.
The fund, known as the savings protection fund (SPS), is designed to bail out credit unions in financial difficulty.
In June, registrar for credit unions James O'Brien issued a consultation paper proposing a statutory bailout fund for credit unions that become insolvent.
Mr O'Brien, who is the regulator for the sector, outlined a number of options for the fund but is understood to favour having a statutory fund that replaces the league's existing €119m savings protection scheme, which is a private fund outside the control of the registrar.
But the six proposals put forward by Mr O'Brien have been rejected by the Irish League of Credit Unions, which wants to retain full ownership and control of any new scheme.
More than 1,000 delegates are expected to attend a special general meeting on Saturday to discuss moves to ensure that the league retains control of the SPS fund.
In a document circulated to each of the 505 credit unions affiliated to the league, all six options outlined by the registrar were rejected by the league.
Instead, the league wants any future fund to be constituted to allow the accounts of the scheme to be consolidated within the accounts of the League of Credit Unions.
Effectively, the league wants to set up a credit union stabilisation company.
When the registrar published his consultation paper in June it stated: "We doubt whether the current arrangements would be able to cope with a widespread problem or, indeed, a series of individual problems over a sustained period of time in the sector."
The regulator is anxious to ensure the stabilisation arrangements can be modernised to better meet the needs of credit unions and their members.
In a consultation paper the regulator set out a number of options. It has sought comments by September 24.
Regulatory officials are understood to be concerned that the credit union sector cannot weather the financial storm much longer, as arrears and loan defaults continue to rise.
In the summer accountants Grant Thornton were appointed to conduct a strategic review into the health of the sector.