Credit unions need to restore confidence
Published 22/04/2015 | 02:30
The Credit Union movement is, like the GAA and the church, deeply embedded in every aspect of Irish society.
There is hardly a family in the country that does not have either a credit union loan or savings of some sort, and thousands of volunteers around the country give their free time and expertise to run this community-based institution.
It is deeply disturbing, therefore, to learn that a secret report, seen only by a very small group within the Irish League of Credit Unions, has listed a catalogue of mismanagement, breaches of rules and poor oversight of its Savings Protection Scheme, which is a rescue fund run by the organisation with the aim of helping out a small number of credit unions which get into trouble.
That this report has surfaced on the eve of the annual general meeting of the Irish League of Credit Unions is welcome, as it will ensure that the matter is raised and gets the attention it deserves; and that delegates have some say on a specialist report into the operation of rescue funds, undertaken by the accountancy specialists, Mazars.
The report found that such funds were given to credit unions which did not need them, proper procedures were not followed and paperwork was missing.
One shocking finding was that some €13m of credit union funds have been put at risk by the way the rescue fund was run. We know that the credit unions have billions of euro on deposit, but the fact remains that this is a very large sum of money when compared with the average loan taken out from a credit union, which currently stands at about €3,000.
In the past two years, some €61m has been used to bail out troubled credit unions.
But the nub of this report is that members' loans which were written off or settled, were then used as collateral by credit unions in difficulty as a condition of getting bail-out funds.
This report and the operation of the Savings Protection Scheme does not inspire confidence, and it is vital in the interest of the majority of credit unions, which are well run, that action is taken and confidence restored immediately.