Talk of €1bn bailout was scare tactics, say credit unions
Credit unions have claimed the regulator has exaggerated the extent of problems in the sector.
The Central Bank and the Department of Finance claimed two years ago the cost of bailing out stricken credit unions could be as high as €1bn.
But, since then, just four credit unions have needed public funding, with the total cost a fraction of the initial estimate.
They have accused the Central Bank of using scare tactics about large-scale collapses of credit unions to bring in regulations that are now stifling the growth of the volunteer-led movement.
The heads of the two representative bodies, Irish League of Credit Unions and the Credit Union Development Association, along with the head of the Credit Union Managers' Association, have questioned the thrust of recent regulatory changes.
In a joint statement, they said credit unions were "increasingly frustrated at regulatory roadblocks put in our paths".
They said problems in the movement have been exaggerated by regulators.
In 2011, Finance Minister Michael Noonan, acting on advice from the Central Bank, announced that the State would have to pump up to €1bn into the sector to plug financial black holes and save a number of credit unions from going bust. Some 79 credit unions were said to be at risk of collapse at the time.
Also saying the regulators got it wrong about the extent of problems in the sector, the State's largest credit union has written to Mr Noonan and to Justice Minister Frances Fitzgerald.
Chairman of St Raphael's Garda Credit Union, Colm Church, wrote: "Despite suggestions during the height of the banking collapse of an imminent credit union crisis, the facts are that just four out of 400 credit unions have required public funding from the exchequer, at a total cost of €6m."
The letter was also sent to the credit union's 34,000 members.
A spokesman for the Central Bank refused to comment on the criticisms of its actions. It, and the Department of Finance, said €5.9m had been used so far from a €250m fund to help credit unions merge.
And a total of €35.5m had been drawn down from a separate fund put in place to recapitalise stricken credit unions.