Watchdog warns 'poor-quality lending' leading to arrears
CREDIT unions have been criticised for poor-quality lending by the regulator for the sector. The registrar for the lenders said many were not checking out if members could meet repayments and were failing to properly deal with arrears cases.
Registrar Anne Marie McKiernan, who is part of the Central Bank regulatory set-up, said the sector was under financial strain. Just €3 out of every €10 in credit union assets were loaned out, there are "serious" governance issues at some credit unions and lending standards are low.
She told a conference at the weekend. that the average level of arrears was falling, but 31 credit unions had arrears that were more than 30pc of their loan books. Sources in the credit union movement were surprised at the speech, which they said did not reflect a rapid fall in arrears, the fact most credit unions were back paying a dividend and that 90pc of credit unions were meeting Central Bank rules on having 10pc of their assets in reserve.