Largest credit union in State being sued for €1.5m back payments
Move seen as an attempt to intimidate smaller lenders to pay up
The largest credit union in the State is facing legal action from the representative body for the sector.
It is thought the move is an attempt to frighten other credit unions into paying millions of euro owed in fees, although this has been denied by the league.
St Raphael's Garda Credit Union has been threatened with High Court proceedings by the Irish League of Credit Unions in a dispute over its payments.
It is the first time the league has sued a credit union.
The league said it was forced to take legal action over the payment of outstanding membership and other fees.
It is understood St Raphael's also owes contributions to the league's bailout fund, the Savings Protection Scheme (SPS).
Around 80 unions are understood to owe money to the SPS fund, which is used to help troubled lenders.
Sources have indicated that the dispute centres around claims St Raphael's owes €1.5m in various payments to the league, a claim the credit union denies.
It is thought the move against the strongest credit union in the State is to frighten other, smaller credit unions into paying their outstanding SPS contributions.
St Raphael's is the largest CU in the country with assets exceeding €400m and 35,000 members, most of whom are members of An Garda Síochána.
It left the league in 2016, but it is understood the league argues it did not leave the representative organisation until January this year.
A memo, seen by the Irish Independent and sent to all league members by the head of legal affairs in the Irish League of Credit Unions, claims money is owed by St Raphael's.
An offer by the league to refer the dispute to mediation was refused by St Raphael's, which insisted the matter be resolved in the High Court, according to the memo.
Legal advice received by the board of the league has led to a decision to initiate High Court proceedings.
"In line with advice received from senior counsel, it has been necessary to issue proceedings in the names of all members of the league," the memo states.
It added: "While the league board regrets that it has been necessary to take this course, it also notes that it is critical for the league and its members that all outstanding amounts due and owing from former members are duly collected and paid."
Asked about the legal action, a spokesperson for St Raphael's dismissed the claims.
"We believe this claim is without merit and we will defend the case fully in court," the spokesperson said.
The Garda credit union said in 2016 it was leaving the league, giving no reason.
It said it would no longer pay the annual fee to the league, which sources estimated was around €150,000 a year.
It also contributed to the league's savings protection fund, understood to have amounted to around €120,000 a year.
Sources say the Garda CU's decision was largely based on the reasoning that St Raphael's is financially secure and has no need for a group protection scheme or any other support from the league.
In May it emerged the credit union was investing a "significant seven-figure" sum to give its members mobile and online banking services.
It signed up with Swiss banking technology provider Temenos to enhance the suite of services offered to members , including allowing them to apply for loans on the new mobile and online services.
St Raphael's emerged from the downturn with its asset base intact and a few years ago it began offering its own mortgages up to €300,000 to members.