DUBLIN, Ireland–Regulatory proposals by Ireland’s Central Bank are “overzealous” and “take risk management to a point where it becomes risk prevention,” the Joint Committee on Finance, Public Expenditure and Reform was told.
The Independent reported that Kevin Johnson, CEO of the Credit Union Development Association (CUDA), appeared before the committee to discuss credit unions’ plans to offer wider services to members and to discuss how credit unions were faring in the current climate. Johnson said the new requirements around governance needed to be proportionate and urged against a “one size fits all’ regulatory model.
“We don’t have an average credit union. They range in size and shape and cover a diversity of needs,” said Johnson, who along with his colleagues has called for credit unions to be assessed using a tiered regulatory framework, according to the Independent.
Johnson was quoted as saying credit unions wanted to be able to provide genuine competition in areas such as mortgage lending but said this would be difficult to do in an environment in which they were all regulated using the same criteria.
The Independent reported that Ed Farrell, CEO of the Irish League of Credit Unions, said impending regulations contained in the final sections of the 2012 Credit Union Act would place limits on the savings unions could take in and also limit the types of investments they could make.
“There is now a growing disconnect between the ethos of credit unions and that our our regulator, the Registry of Credit Unions,” he was quoted as saying. “This is not about being for or against regulation. It is about better, more effective regulation and doing the right thing.”
According to the Independent, Farrell said credit unions had an exciting developmental agenda, which included the rolling out of electronic payment facilities and a plan to create a central fund to lend to small businesses. He also said the sector was involved in a pilot project with the Department of Social Protection for a new loan program that would prove to be a real alternative to moneylenders.
“Serving a broad social agenda is part of what credit unions were set up to do. At present, credit unions hold surplus funds of €8 billion in investments on behalf of members. We believe these surplus funds could be used more efficiently,” he said, citing assistance with social housing as an example.
Ireland’s credit unions have almost three-million members and more than €13 billion in total assets.