Central Bank calls for higher credit union standards as outsourcing issues revealed
An inspection by the Central Bank has found problems with the way activities are outsourced at some credit unions.
A number of credit unions selected firms to carry out the likes of information technology (IT) services for them on an informal and undocumented basis, the probe found.
And boards of credits unions were not involved in the outsourcing processes and decisions.
Boards were sometimes only told about the outsourcing of a service when there was a problem.
However, the Central Bank said it was also clear that a number of credit unions have robust frameworks in place for how they handle outsourcing of services.
The examples of good practice were not just in larger credit unions, but also in smaller ones.
Now the Central Bank wants all credit unions to raise their standards.
A sample of 16 credit unions were inspected by regulators.
“The Central Bank expects all credit unions to consider the issues raised in the report and to examine the implementation of their own outsourcing agreements, policies and procedures, developing and enhancing these where necessary by taking account of the findings and observations as set out in this report,” it said.
Where issues have been identified the Central Bank followed up directly with the credit unions concerned to address the issues.
Credit unions are increasingly outsourcing services, such as IT and accounting, as they seek to concentrate on their core activities of lending and taking in savings.
The Central Bank said outsourcing enables credit unions to avail of potential efficiencies and access necessary technical and operational expertise in a cost-efficient manner.
It can further enable credit unions to release internal resources for other areas of credit union operations.