Levy hike 'will force credit unions to raise rates'
CREDIT unions have called for a freeze on plans to increase the Central Bank levy on the sector.
There are claims the higher charge would force the local lenders to hike their borrowing rates, which would hit the most vulnerable in society.
The Irish League of Credit Unions (ILCU) has welcomed an attempt by former minister Denis Naughten to amend the Finance Bill, to stop a large hike in the levy on the State's 241 credit unions.
The Central Bank wants credit unions and other financial services companies to pay more of the cost of regulating them.
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Credit unions argue that the increase is so severe it will put them under huge strain.
They say they should not be treated like banks, as they are largely volunteer-led and are not-for-profit institutions.
Credit unions currently pay just 9pc of regulatory costs linked to their operations. The larger the credit union, the more they pay.
But the Central Bank wants this payment to rise to 50pc of regulatory costs by 2022. Credit unions already pay three other levies to the State.
Deputy Naughten has tabled an amendment to the Finance Bill, seeking a freeze on the introduction of an increased Central Bank levy.
"The levy would force them into a significant rate hike, hitting the most vulnerable in communities throughout the country," the TD said.
He added that credit unions are not the same as banks and should not be treated the same.
The ILCU welcomed the TD's intervention.
It said: "The ILCU has been campaigning on this issue since the Minister for Finance consented to this increase on June 14.
"The misguided equating of credit unions with banks, and a hike in levies by a projected €6.3m, underlines the cultural misfit between the credit union movement and the Central Bank."
The plan to increase the levy comes as 30 of the largest credit unions have launched a full-service current account that will see them finally challenge the banks over such accounts.