Central Bank to cap Credit Union savings at €100,000
A savings limit of €100,000 per customer will be imposed on credit unions under regulations due to come into force in January.
Some lending restrictions are set to be relaxed over time and the new rules won't bar the sector expanding into the mortgage market.
However, the Irish League of Credit Unions (the League), the Credit Union Development Association (CUDA) and the Credit Union Managers Association (CUMA) issued a joint statement saying they are "greatly concerned" by the plan, which imposes restrictions that don't apply to banks.
In a 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."
Yesterday the Central Bank published regulations that will come into force from the start of the New Year, along with feedback garnered during the consultation process. The new rules include a cap of €100,000 to the amount of savings a customer can have with a credit union, and a 25-year limit on the length of loans that can be made by credit unions.
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, which representative organisations said will have the effect of forcing the sector to place their 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, but will reduce over time as the new rules take effect, the Central Bank said.