Maynooth Credit Union wins open court hearing of challenge to regulator
Registrar says lender’s reserves fall below required 10% threshold of €1.25m
The Central Bank and credit union regulator have failed to get a private court hearing of a challenge to their bid to make Maynooth Credit Union in Kildare comply with directions in relation to the level of financial reserves to be kept by it.
The Irish League of Credit Unions (ILCU) and Maynooth Credit Union contend the directions severely restrict their ability to operate.
They also argue that the credit union sector is fundamentally sound and has the backing of a loyal membership as well as the ILCU’s savings protection fund.
The regulators claim that Maynooth has not complied with a direction to have a minimum 10 per cent of assets in its reserves as required by law.
They had asked the High Court for an in camera (private) hearing of a challenge by Maynooth and the ILCU to directions issued last April and July by the registrar of credit unions, including in relation to Maynooth’s reserves.
Following a two-day hearing over the in camera issue, the president of the High Court, Mr Justice Nicholas Kearns, yesterday ruled the challenge should be heard in open court as there was no express statutory bar providing otherwise.
The registrar, Sharon Donnery, said in an affidavit that, in the second half of 2012, her office decided to undertake an asset review programme. Maynooth was chosen as one of the participants.
Accountants Deloitte carried out an asset review at Maynooth after which the registrar notified the credit union’s directors it was in breach of the 1997 Credit Union Act and regulations passed in 2009 in relation to the 10 per cent of reserves which the registrar said should be set at €1.25 million.
It was asked to seek private- sector funding or engage with the Credit Union Restructuring Board in relation to potential restructuring solutions, Ms Donnery said. Maynooth said it had requested support from the ILCU’s savings protection scheme but failed to comply with the direction, Ms Donnery said
Maynooth commissioned its own report and, along with the ILCU, put forward a lower figure for the 10 per cent reserve than had been identified by the registrar.
The registrar considered there was nothing in that report to alter its earlier view and issued a second direction that the credit union come into compliance, Ms Donnery said.
Maynooth and the ILCU then got High Court permission to challenge the directions which they say severely restrict their ability to operate and could have implications for the State’s 400 other credit unions.
The Central Bank and Registrar of Credit Unions argued the case should be heard in camera due to what they said was “commercially sensitive” information involved and concerns about the impact that information could have on the stability of Maynooth and the credit union sector as a whole.
Maynooth and the ILCU argued they had no fear of the information that would be presented in open court.
Tom Kiely, head of monitoring in the ILCU, in an affidavit rejected the claim any of the available data would suggest financial instability in Maynooth or in the sector.
Any suggestion that disclosure of relevant information could lead to a loss of confidence or withdrawal of funds from Maynooth, or from credit unions in general, were misplaced and did not reflect the fundamental differences between the ordinary banking world and the credit union sector, he said.
Mr Justice Kearns has fixed January 21st for the hearing of the challenge.