Business Personal Finance

Thursday 18 January 2018

Credit unions oppose bid to use rescue fund for mortgage plan

(Stock picture)
(Stock picture)
Charlie Weston

Charlie Weston

A major clash is expected at the annual general meeting of the Irish League of Credit Unions this weekend over the use of a €95m fund.

Multiple motions have been tabled calling for the suspension of payments into the league bail-out fund.

A number of credit unions affiliated to the league are opposed to the use of money from the fund to pay for a new payments system for credit unions and to support plans to develop systems to allow credit unions to offer mortgages.

The fund, called the Savings Protection Scheme (SPS), was set up to rescue credit unions that get into trouble.

It is funded by an annual levy on the 339 credit unions affiliated to the league in the Republic, and is understood to amount to €95m.

The board of the league, headed up by outgoing president Brian McCrory, is understood to see the fund as overcapitalised. It wants to use €3m of the money to further develop an electronic payments system for member credit.

There are also board plans to put €1.5m of the SPS funds to support plans for the movement to develop systems to allow the locally-owned lenders to offer mortgages.

But motions from the ASTI, Killarney, Inchicore and District, Core, and Drogheda credit unions call for payments from credit unions into the SPS fund to be suspended, according to the agenda, seen by the Irish Independent.

Some of these credit unions have their own payments system and are not in favour of rescue funds created by a levy on all league members being used to support mortgage plans or the league's Credit Union Service Organisation for Payments (Cusop) arm.

Cusop aims to allow credit union members to have payments from a bank, employer or social welfare office paid directly into their credit union account by electronic transfer.

The fact that five credit unions have submitted motions opposing the funds from the Savings Protection Scheme being used to support the electronic payment plan or mortgage plans will be seen as a rebuff to the league board and its officials.

Another motion calls on the league board to investigate why most of the movement's three million members are not borrowing.

Lending levels at the State's 286 active credit unions have collapsed in the past few years.

A report by DCU academic Dr Ciarán Mac an Bhaird to be presented to the AGM says that if credit unions become significant players in the mortgage market there would be increased consumer competition and choice.

The annual general meeting in the Citywest Hotel in Dublin is also set to select a new president from votes by 1,000 delegates.

Irish Independent

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business