Differences have emerged between the Irish League of Credit Unions (ILCU) and the Credit Union Development Association (Cuda), the two rival credit union lobby bodies, over a supposed agreement by the Central Bank to directly involve the league in regulatory oversight of its members.
ILCU and its member, Maynooth Credit Union, yesterday dropped a lawsuit against the regulator, partly because ILCU said it had secured, from the Central Bank, a "unique" consultative role whenever there are talks between the bank and ILCU credit unions over issues such as financial stability.
Kieron Brennan, chief executive of ILCU, which represents the bulk of the country's 400 credit unions, claimed its new status was outlined yesterday in a letter from the Central Bank specifying its role, which he described as a "big step forward".
However, Cuda, which represents some larger credit unions, said it received the same letter yesterday from the Central Bank and it understands that nothing has changed.
‘Unique
way of working'
"We were in discussion with the [bank] and they have confirmed that there have been no changes to existing working and representative relationships between the Central Bank and the credit union representative bodies," Cuda said.
The letter sent to ILCU and Cuda yesterday sets out principles of consultation with the credit union lobby groups. ILCU said it represents a “Unique . . . new way of working” because the regulator will now consult with it over the affairs of individual unions.
The letter, signed by credit unions registrar Sharon Donnery, acknowledges the right of the lobby groups to make "reasonable representations" to the regulator over its members' affairs. It also promises to give the lobby groups advance warning on any policy changes.
“In the past, there was no guarantee ILCU would be allowed to take part in [talks between ILCU member unions and the regulator],” said Mr Brennan. He acknowledged, however, that ILCU already had the right to make representations on behalf of its members. But he said it was “not uncommon” for it to be shut out of such engagements with the regulator.
Balance-sheet boost
The letter states "any rights to make representations cannot affect the Central Bank's entitlement to communicate directly with the credit union and its officers and their obligation to communicate directly with [IT]."
It states that while consultations with lobby groups will “inform” its decision making, it reserves the right to act alone as regulator and to discard the contents of the letter as it sees fit.
The letter was sent yesterday following talks between ILCU/Maynooth and the Central Bank in relation to a lawsuit against the regulator over an order it gave last year to Maynooth to boost its balance sheet by €1.5 million to meet new solvency requirements.
In 2012, Ms Donnery selected about a quarter of the country’s 400 credit unions for a detailed review of balance sheets. Maynooth, which was also slapped with operating limits by the regulator, was one of five ILCU members issued with regulatory orders following the reviews.
ILCU and Maynooth took a case challenging the orders but dropped it yesterday after receiving the letter, although the regulatory orders remain in force. ILCU also said the regulator had agreed to complete updated reviews of the five credit unions, including Maynooth.
The Central Bank will now accelerate the stalled review of the remaining credit unions.
