| 15.1°C Dublin

Credit unions reject new debt plan

THE largest representative body for credit unions in the country is on a collision course with the Central Bank after opposing a new plan for dealing with heavily indebted households.

The board of the Irish League of Credit Unions voted unanimously at the weekend to reject the new scheme, the Irish Independent has learned.

The decision to formally reject the latest Central Bank move to tackle mortgage arrears comes after months of wrangling in special meetings set up by regulators involving banks, credit card providers and credit unions.

Priority

Regulators wanted agreement on how to deal with mortgage arrears. Priority was to be given to repaying mortgages, with a deal sought on how much of a household's leftover income would repay credit union loans and credit card bills.

The talks failed to reach agreement after the credit union body walked out.

That prompted Central Bank official Fiona Muldoon to announce a pilot scheme to roll out the debt-relief initiative to 750 troubled borrowers.

Credit unions feel they will be the big losers. Indebted borrowers will have to stop making credit union repayments, and credit unions will have to write off debts.

Irish Independent