THE DEPARTMENT of Finance is urgently reviewing credit union legislation that limits terms on loans in a move to allow borrowers in difficulty to reschedule loans, the Minister for Finance told the Irish League of Credit Unions annual general meeting over the weekend.
Brian Lenihan told delegates he had asked his department to reconvene the 2006 group that had reviewed the Credit Union Act 1997 to extend the limits on the movement’s long-term loans, which were capped at 10 years, and in some cases five years.
He said he had asked his officials in recent days, after meeting with the league’s representatives, to review the Act to put in place longer lending terms so loans could be restructured.
He said the mandate for group, which was chaired by his department and composed of representatives of the league, the Credit Union Development Association and the Registrar of Credit Unions, will be “to find as a matter of urgency a comprehensive solution to this issue”.
The conference, which was attended by more than 2,000 delegates, was told that some credit unions will be unable to pay a dividend this year, but this should not be taken as a sign of trouble or weakness.
Outgoing president Uel Adair said the general health of the credit union movement was “robust and encouraging”.
He said it had been sheltered from some of the economic turbulence because it did not borrow on the money markets and then lend those funds at a premium.
He conceded “errors had been made” and said this was because of the credit unions’ response to the increasingly aggressive credit offering strategies of the banking sector and “in allowing ourselves to be attracted by unsuitable investment opportunities”.
“Despite current conditions, the general health of our movement is encouraging in that our 508 member credit unions have 2.9 million members between them, they have €14 billion in assets, €11.9 billion in savings, with only €7 billion of that in loans,” he said.
