Credit unions to lobby TDs over €100,000 savings limit
Published 10/08/2015 | 02:30
Credit unions will lobby every TD in the country in a bid to block new Central Bank rules, which they say are giving an unfair advantage to banks.
The move is being co-ordinated by the Irish League of Credit Unions and will put pressure on politicians, especially Government TDs, ahead of a general election in the coming months.
Credit unions are upset at new regulations being introduced by the Central Bank that are due to come into force in January.
They have baulked at a savings limit of €100,000 per credit union member, which they say will perpetuate the myth that they are "the small man's bank" and not to be trusted with larger lump sums.
The new rules have to be signed into law by Finance Minister Michael Noonan. The credit unions are calling on the minister not to sign the commencement order putting the rules in place.
A communication sent to all member credit unions by the league encourages them to write to Mr Noonan and to lobby their local TD on the issue of the new rules.
The text of a suggested letter to local politicians is also included.
The new rules are called CP88.
League chief executive Ed Farrell states in his communication: "My concern in relation to CP88 is that well-founded, evidence-based concerns of credit unions have been ignored by the Central Bank."
He outlines that the league, the representative body for the majority of credit unions, was strongly lobbying the Government on the issue.
Mr Farrell described the new regulations as a "crude, one-size fits all" approach to regulation.
When the new rules were unveiled earlier this month, three credit union bodies took the unusual step of issuing a joint statement condemning them.
The league, the Credit Union Development Association and the Credit Union Managers Association said they were "greatly concerned" by the plan, which imposes restrictions that don't apply to banks.
In the joint statement the three organisations criticised what they called the Central Bank decision to implement previous proposals with minimal changes, despite feedback from the sector.
"In simple terms, these new regulations will ensure that credit unions are restricted from competing effectively with other financial service providers into the future.
"Credit unions are now looking to provide more services to their members and their local communities at fair and reasonable rates - instead the draconian rules published today will restrict credit unions from offering real choice to members."
Credit unions will continue to be able to make loans secured on homes, which could facilitate their plan to push into the mortgage market, though savings limits could impact any efforts to scale up by the sector.
The rules also limit individual credit unions' ability to invest savers' funds, including in shares.
Representative organisations said this would have the effect of forcing the sector to place its funds on deposit with the main banks.
Lending restrictions applied by the regulator to a significant number of credit unions since the crash are to remain in place.
However, the Central Bank has said these will reduce over time as the new rules take effect.