Squeezed lenders are engaged in a battle for their survival
RIGHT across the country many hard-pressed parents will be coming to the conclusion that a loan from their local credit union is the best bet to finance the cost of sending their son or daughter to college.
Education-related loans from credit unions can be as low as 4pc - a rate that knocks the socks off the banks, which charge at least three times that.
Because credit unions are owned by their members and have a strong sense of social responsibility they tend to heavily discount loans for the likes of third-level courses.
Many people, particularly in rural Ireland, would never have made it to university and college if it was not for the support of the decent folk who run their credit union.
But the revelation that a number of credit unions are using private detectives to snoop on members shatters the view that they are your cuddly, friendly lender.
Some of these private detectives have been using illegal techniques to get personal information on credit union members from the Department of Social Protection.
Credit union bodies have been at pains to point out that they did not know about, and do not condone, such underhand practices.
But the question still arises as to why they are using private investigators at all?
The reason it has come to this is because credit unions are under massive financial and regulatory pressure.
And they would argue they are entitled to recoup money they are owed, especially if they suspect they are being seen as a soft touch, and repayments could be made on the loan.
Private detectives are only used when it is proving impossible through all other means to contact a member who is in default on a loan.
Regulators are pushing the lenders hard to do more to collect loans in arrears.
The State's 386 credit unions are under considerable strain. The forced shut-down last month, under orders from the High Court, of Berehaven Credit Union in Cork was a stark reminder of the pressure on the movement.
It came just a few months after the debacle around Newbridge Credit Union in Kildare that was forced to effectively shut, with its accounts transferred to Permanent TSB.
One of the big problems for credit unions is loan arrears, an issue that reflects the squeeze on household budgets.
Around €1 in every €5 that has been lent out by credit unions is not being repaid as agreed.
On top of this credit unions are struggling to make an income from loans - their main source of revenue.
Last year they had total loans of €4.3bn, according to the Central Bank.
But this was down 13pc on the total amount of lending for 2012.
It does not help that around half of the credit unions have lending restrictions imposed on them by the Central Bank, their regulator.
A regulatory burden that is getting heavier is another issue for the sector.
These are the main reasons up to 150 credit unions are considering merging to create stronger units.
All of this means that credit unions are in a battle for their very survival.
They may be the backbone of communities, be popular and trusted, but hard times have forced credit unions into hard measures.
However, one suspects that using private detectives to snoop on members is an extreme measure credit unions will come to regret.