Credit unions seek regulatory changes to allow financial help for members

Association wants to ensure borrowers are not penalised for missing loan payments

Credit unions estimate  up to 100,000 of their  members may be in a situation  where they are or will experience loss of income due to coronavirus

Credit unions estimate up to 100,000 of their members may be in a situation where they are or will experience loss of income due to coronavirus

 

Credit unions have urged the Government to introduce regulatory changes to allow them to better respond to members affected by the Covid-19 crisis.

The Credit Union Development Association (CUDA), which represents 50 branches, said that as the sole provider of credit for many Irish people, and as a body that has more than a million members, it was critical that changes be introduced to help borrowers experiencing financial difficulties.

CUDA estimates that up to 100,000 Credit Union members may be in a situation where they are or will be experiencing loss of income due to coronavirus.

At present credit unions, which together account for an estimated 34 per cent of the consumer lending market in the State, are operating on a case-by-case basis to assist members in difficulty, helping them by taking measures such as reducing payments, enabling individuals to go interest-only, extending loans and so on.

CUDA said it was involved in discussions with the Central Bank to ensure capital requirements do not stifle any of the means by which it can assist members.

Its chief executive, Kevin Johnson, told The Irish Times it wanted to be able to ensure borrowers were not penalised for missing loan payments and that their long-term credit rating was not negatively affected.

“No one knows how long crisis measures will have to be in place, and it is difficult to quantify the full financial impact these measures will have on credit union members, the economy and, indeed, credit unions themselves.

“So far calls to credit unions have increased by about 400 per cent, with many calls from concerned members about their sudden loss of income and how they may be unable to meet some or all of their loan commitments,” said Mr Johnson.

The association has created a web form to help standardise the requests process for loan repayment flexibility by members, and to enable individual credit unions to redeploy staff to assess and assist as a priority.

Supports

Separately, Irish peer-to-peer lender Linked Finance has unveiled a range of financial supports to borrowers during the coronavirus outbreak. This includes applying a blanked two-month payment break to all its loans for businesses working in the hospitality sector.

In addition, it said it was willing to consider payment breaks for businesses in other sectors, and has introduced a new loan facility with a deferred repayment option to help SMEs which require working capital.

Linked Finance has provided loans totalling over €130 million for more than 2,500 businesses since it was established in 2013.