Credit unions told new rules less `flexible'

The new Irish Financial Services Regulatory Authority will have enormous implications for the Irish credit union movement, delegates at the International Conference of the World Council of Credit Unions in Killarney have been told.

The new single regulatory arrangements for the financial sector are scheduled to come into effect next January, Mr Noel Martin Sisk, the Registrar of Friendly Societies said. He said the regulations will mean that the old "flexible system" of regulatory control will pass from the Register of Friendly Societies to what many within the credit union movement fear will be a more heavy-handed approach. "The regulatory arrangements which have been operated by the Registrar of Friendly Societies over the years and which have allowed Irish credit unions to prosper in a flexible regulatory environment are now about to change," Mr Sisk warned the congress which is being attended by up to 700 delegates from credit unions world-wide.

The new structure is geared towards consumer issues and results from the fall-out of scandals in the banking and building society sector, where customers were "being ripped off in quite a serious way", a situation not of the making of the credit union and something which credit unions had nothing to do with, Mr Sisk claimed.

Comprising a board with an independent chairperson, a chief executive, a director of consumer protection, and a registrar of credit unions, the new regulatory authority will be the umbrella group for the credit unions. Mr Sisk said it is likely the registrar for credit unions will be reporting to the chief executive, not to the board, a scenario that may have implications for independence.

"Credit Unions don't want a situation where they are going to be swallowed up; they still want to retain their own separate identity and ethos. They will want an assurance on that," he said.

Credit unions do not have a major consumer problem, they are member-led and non-profit, he said. "In general terms consumer issues are not substantial in the context of Irish credit unions. The level of complaints by members within the movement is quite low. With few exceptions credit unions are operated in the Republic in a very effective way," Mr Sisk added.