Credit unions must unite or face possible break-up

The credit union movement faces possible break-up if members do not close ranks, the supervisory committee of the Irish League of Credit Unions will warn delegates at its annual conference this weekend. The three-member group will also say that approaches by Church & General (Allianz) to individual-affiliated credit unions, seeking to do business outside league structures, poses a danger to the movement. Church & General could not be contacted for comment last night.

The committee, which supervises the league board, will tell delegates "the signs are all about us" regarding the possible disintegration of the movement.

The league has an estimated 2.6 million members and deposits of approximately £4.5 billion (€5.7 billion).

The two-day meeting in City Hall in Cork is to consider a number of crucial motions, including one from the board calling for the establishment of a root-and-branch review of the league's structures and operations.

It will also consider motions linked to the ongoing fallout from the league's disastrous ISIS technology project. The attempt to introduce a technology system for the league's affiliates which would be linked to the banks' clearing system collapsed after expenditure of £27 million. Motions of no confidence in board members are to be put to the a.g.m.

The supervisory committee, in its report to the a.g.m, expresses concern about approaches to individual credit unions from Church & General to supply insurance.

The company made an unsuccessful tender to supply insurance through the league to its affiliates. It lost out to Royal & Sun Alliance. The commission, which the league receives from insurance sold to members, is one of its main sources of income and affiliated credit unions must purchase insurance through the league or face expulsion.

Church & General is now approaching individual credit unions quoting lower prices than it did when tendering to the league, according to the committee's report.

"The committee wishes to draw attention to the dangers inherent in such practices. It is a major concern of this committee that a lack of support and commitment of credit unions for the products introduced by the league could lead to the fragmentation of the movement.

"Furthermore the emergence of what is commonly referred to as the "Tullamore Group" and frequent distinctions by some to `big' and `small' credit unions are worrying developments."

The Tullamore Credit Union, one of the largest in the league, was very critical of the league's handling of the ISIS project. CIM is an investment scheme run by Davy Stockbrokers in association with the league, using surplus income from affiliated credit unions.

The supervisory committee comprises Mr Joe Cleere, Mr Liam Kelly and Mr Phil Roddy. The committee still believes access to the banks' clearing system is essential for the continued development of the credit union movement, in particular because of the Government's National Payments Strategy. The strategy envisages salaries and state payments as well as utility bills being processed through an interconnected system.

The committee makes very little criticism of the handling of the ISIS project. "In our opinion it would have been better if technical expertise had been engaged by the league board on its own behalf to advise it from the outset. That is the kernel of the situation."