Fine Gael Deputy raises Credit Union restrictions with Financial Regulator

Fine Gael TD for Cavan-Monaghan Heather Humphreys highlighted lending restrictions on credit unions as a major cause for concern at a recent meeting of the Oireachtas Committee on Finance, Public Expenditure and Reform.

During her address to the meeting, which was attended by the Financial Regulator, Matthew Elderfield and the Governor of the Central Bank, Patrick Honohan, Deputy Humphreys warned that “there was a real concern among credit unions that current lending restrictions imposed by the Registrar of Credit Unions coupled with reduced loan demand are seriously reducing credit union income and that this will further increase problems in Credit Unions.”

Deputy Humphreys continued by saying that it was of great concern to her that credit unions are being put at a market disadvantage, stating that she was unaware of any lending restrictions imposed on the banks for similar types of personal lending.

“Credit unions are not being allowed to serve their local communities, of which they have been so much a part, because of these restrictions. To give an example, students are going back to college and credit unions have always been well placed to assist them and their parents in financing their education. However, owing to these lending restrictions in many credit unions and the connected borrower rule being applied, they are being turned away by their local credit unions, not because they are unwilling to lend to them but because they are unable to lend to them and their parents because of the restrictions. Unfortunately, because of these restrictions on the credit unions many people are being driven into the hands of the moneylenders who are alive and well. What regulations are in place to oversee and monitor the actions and lending practices of moneylenders?

Responding to Deputy Humphreys remarks, the Financial Regulator Matthew Elderfield stated that “the key challenge facing the Credit Union sector is how to preserve the local contact, micro-finance and links with the community that are integral to the sector. The need to strengthen the balance sheets of the credit unions means consolidation is inevitable - I do not know the degree to which consolidation will be required, but it is bound to happen. There is also a need to improve the infrastructure and support around credit decisions and so on. That is a vital challenge for the Commission on Credit Unions and the Oireachtas.

It emerged in national media reports on Tuesday that close to 300 credit unions have now been ordered to restrict their lending to consumers resulting in members with good credit records being turned down for loans.

Responding to the reports, Deputy Humphreys said this was why she felt the need to raise this important issue with the Financial Regulator and the Central Bank Governor at the recent Oireachtas meeting.

“The media reports which emerged on Tuesday are exactly in line with what I have been saying on this issue. I believe that the credit unions could be used as a vehicle with which to inject credit into local communities. However at present this is simply not happening. As I outlined at the Finance Committee meeting this is having a particularly devastating impact for parents who are seeking a loan to put their children through college. Parents are being left with the option of either going to the moneylenders or informing their children that they can’t go back to college. This is an issue which I have already raised in Dail Eireann and it is one which I will continue to raise when the Dail resumes for the autumn session,” concluded Deputy Humphreys.

Fine Gael TD for Cavan-Monaghan Heather Humphreys highlighted lending restrictions on credit unions as a major cause for concern at a recent meeting of the Oireachtas Committee on Finance, Public Expenditure and Reform.

During her address to the meeting, which was attended by the Financial Regulator, Matthew Elderfield and the Governor of the Central Bank, Patrick Honohan, Deputy Humphreys warned that “there was a real concern among credit unions that current lending restrictions imposed by the Registrar of Credit Unions coupled with reduced loan demand are seriously reducing credit union income and that this will further increase problems in Credit Unions.”

Deputy Humphreys continued by saying that it was of great concern to her that credit unions are being put at a market disadvantage, stating that she was unaware of any lending restrictions imposed on the banks for similar types of personal lending.

“Credit unions are not being allowed to serve their local communities, of which they have been so much a part, because of these restrictions. To give an example, students are going back to college and credit unions have always been well placed to assist them and their parents in financing their education. However, owing to these lending restrictions in many credit unions and the connected borrower rule being applied, they are being turned away by their local credit unions, not because they are unwilling to lend to them but because they are unable to lend to them and their parents because of the restrictions. Unfortunately, because of these restrictions on the credit unions many people are being driven into the hands of the moneylenders who are alive and well. What regulations are in place to oversee and monitor the actions and lending practices of moneylenders?

Responding to Deputy Humphreys remarks, the Financial Regulator Matthew Elderfield stated that “the key challenge facing the Credit Union sector is how to preserve the local contact, micro-finance and links with the community that are integral to the sector. The need to strengthen the balance sheets of the credit unions means consolidation is inevitable - I do not know the degree to which consolidation will be required, but it is bound to happen. There is also a need to improve the infrastructure and support around credit decisions and so on. That is a vital challenge for the Commission on Credit Unions and the Oireachtas.

It emerged in national media reports on Tuesday that close to 300 credit unions have now been ordered to restrict their lending to consumers resulting in members with good credit records being turned down for loans.

Responding to the reports, Deputy Humphreys said this was why she felt the need to raise this important issue with the Financial Regulator and the Central Bank Governor at the recent Oireachtas meeting.

“The media reports which emerged on Tuesday are exactly in line with what I have been saying on this issue. I believe that the credit unions could be used as a vehicle with which to inject credit into local communities. However at present this is simply not happening. As I outlined at the Finance Committee meeting this is having a particularly devastating impact for parents who are seeking a loan to put their children through college. Parents are being left with the option of either going to the moneylenders or informing their children that they can’t go back to college. This is an issue which I have already raised in Dail Eireann and it is one which I will continue to raise when the Dail resumes for the autumn session,” concluded Deputy Humphreys.