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UNREGULATED money lending could re-emerge if credit unions are discouraged from lending to those with written-off debts.

Up to 100 credit unions could be merged under a major restructuring plan recommended by the Commission on Credit Unions. The Commission recommends that local branches should be strengthened and have significantly expanded products.

The Credit Union Development Association CEO Kevin Johnson welcomed the report, but warned: "If the Personal Insolvency Legislation is enacted as currently presented, it could lead to write- downs unsustainable for many credit unions and discourage credit unions from lending to those who are financially excluded from banks, which is likely to result in the re-emergence of widespread unregulated money lending."

The commission's final report warned that the financial position of a significant number of credit unions will "deteriorate markedly between now and 2013".

It claimed that 51 of 404 credit unions in Ireland have insufficient capital to withstand loan losses, while 25 could be considered "seriously undercapitalised"


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