Differences within the credit union movement widened yesterday as two further member-unions joined a campaign by the Tullamore Credit Union to oppose a controversial new computer system (ISIS), which has projected cost overruns of £28 million (€36 million).
Some 19 branches have publicly pledged to oppose the ISIS project, the costs of which have been revised upwards from £40 million to £68 million. So far around 330 out of a total of 565 credit unions have supported ISIS and paid either a £10 or £20 levy per account holder towards the cost of developing the new computer system, which would provide a range of electronic banking services.
However, the huge cost overrun would mean participating unions paying 15 pence per week for every member over five years to finance the project. In addition, a sum of £9.7 million in levies is still due from some of the 330 credit unions to cover initial estimates, putting the future of the computer system in doubt.
The Secretary of the Irish League of Credit Unions (ILCU), Mr Tony Smyth, said the British financial consulting company, OSI, which compiled the costings for the ILCU, had agreed to offer further consultation work free after, he claimed, they failed to take account of a £9 million VAT bill and costs for managed service provision.
The league is also understood to be considering legal action against the company.
OSI could not be contacted for comment yesterday.
Credit Union members' dividends would probably be affected in the short term, said Mr Smyth. However, he said the system would deliver long-term gains.
Opposition to the ISIS system is predominant among those credit unions which have not paid the levy. Last week, Mr John Gallagher, president of Tullamore Credit Union, wrote to all 565 branches of the Irish League of Credit Unions describing the ISIS project as "the most decisive issue ever to face the movement".
He opposed the use of £5.5 million in loans from the Savings Protection Scheme - an emergency reserve of around £40 million gathered from the affiliation fees of individual members - to fund part of the ISIS system. A statement issued yesterday by the Tullamore Credit Union said: "Should the league take any decision in respect of ISIS that we feel would not be in the interests of our members, we would be forced to seriously consider our continued participation in the league."
A full debate on the viability of ISIS, which is being backed by the leadership of the Irish League of Credit Unions, is scheduled to take place at an e.g.m. of the league this weekend. Mr Jim McMahon, president of the Irish league said he was confident that a proposal to finance a full root-and-branch review of the ISIS project would meet with members' approval.
