Wednesday, 29 March 2017

ILCU meets with the Oireachtas Committee on Finance, Public Expenditure and Reform and



One of the Six Strategic Steps set out by the Irish League of Credit Unions (ILCU) in advance of the last general election was that credit unions would feature on the agenda of the Oireachtas Committee on Finance, Public expenditure and Reform and Taoiseach on a recurring basis.  On March 21st last, I joined Mr Ed Farrell, CEO of the ILCU, to address this committee and discuss the critical issue of funding for social housing.

In the 2014 policy document Social Housing Strategy 2020, the then government looked to credit unions for funds.  We responded with a very detailed policy paper setting out how that could be delivered in ways that would allow all credit unions who wished to contribute via a centralised vehicle that underpins the credit union ethos, and ensures effective regulatory oversight.  The response has been very positive.  Regrettably, delivery to date has been nil and the ILCU is concerned that this process is as much about time management, as change management. 

What we do know is that on social housing, we are told by the Department of Housing that they are very interested in our proposal.  Given that they elicited it; they should be.  They in turn are talking to the Department of Finance, who we are led to believe are talking to the Central Bank.  I have no doubt such conversations are taking place, what I do doubt is whether any action will ever arise as a consequence.

Credit unions have a lot more to give to communities.  We have resources.  We have a national network.  But we are challenged too.  On the one hand we must develop our business model.  We are rightly reminded of this by the regulatory authority.  But we are caught in a Bermuda triangle, where we must develop, but regulatory approval has not been forthcoming for the changes we must adopt.  We receive political encouragement from an Oireachtas that ironically handed over nearly all effective responsibility to the Central Bank. 

Yet, there are crying needs in our communities.  The ILCU has developed detailed policies on how change can be achieved.  But change will not happen, and credit unions will not realise their potential, unless there is sustained political involvement that effectively connects better policy with appropriate regulation.

My hope is that our appearance before the committee is the beginning of that process, which can, and should be, short and purposeful.

Tuesday, 7 February 2017

Irish League of Credit Unions welcomes Central Bank’s review of investment regulations



The Irish League of Credit Unions has welcomed the announcement by the Central Bank that it will review investment regulations for the sector in 2017. The ILCU has been campaigning for a review of these regulations, particularly to allow some of the €8.5 billion held by its affiliated credit unions in surplus funds be used to fund government social housing projects. A move by the Central Bank to broaden the current investment classes permitted for credit unions could pave the way for such an investment.

In response to a government request in November 2014, the ILCU developed a comprehensive proposal outlining how surplus credit union funds could be used for social housing. In June 2016, the Oireachtas Committee on Housing and Homelessness then made a number of priority recommendations, including that Government should establish an off-balance sheet funding mechanism for social housing and should seek to mobilise as quickly as possible, all possible sources of funding, including funding from the ILCU.


Under the current investment regulations however, the credit union movement is only authorised to invest in Irish and EMU state securities, accounts in authorised institutions, bank bonds, investment in equities and collective investment schemes. Property schemes are however specifically excluded. A broadening of the collective investment schemes category could mean that investment in social housing would be authorised.

By enabling the allocation of some of these funds to social housing, credit unions could go a long way towards meeting the government’s €5.35 billion funding requirement to deliver 47,000 social housing units by 2021.

Credit unions stand ready and willing to assist in helping to solve the housing issues facing the country. Supporting social housing is not only a productive and sustainable use of credit unions’ excess funds, but will also address a key social issue deeply affecting the communities our credit unions serve.

We wholeheartedly welcome the Central Bank’s announcement that it will review investment regulations and we would urge that the review is carried out as a matter of priority. We are all too keenly aware of the housing crisis facing the country; our young people struggling to buy their own homes, rising rental prices, waiting lists for social housing and the huge challenge of homelessness and people living in long-term emergency accommodation. This is a situation that needs to be addressed sooner rather than later, and by enabling credit unions to put surplus funds behind social housing, it is a situation where we could make a real difference.

Monday, 12 December 2016

Irish League of Credit Union Reports Strong 2016 Year-End Figures.



The Irish League of Credit Unions recently released very positive 2016 year-end figures, showing that demand for loans is increasing steadily across all affiliated credit unions. Loans are up by a significant €216 million (6.1%) in the Republic of Ireland, with 192 credit unions growing their loan books. Lending has now been on the rise for five out of the last six quarters.

In Northern Ireland, loans are up by over 3%, with 72% of credit unions reporting a growth in their loan books. Lending has now been on the rise in Northern Ireland for four consecutive years, and has grown by 11% in total since late 2012.

This healthy upward trend in lending is hugely encouraging. Credit unions have been very proactive in growing their loan books over the past year, and this has been demonstrated by the fact that the vast majority are now reporting lending increases. The figures are reflective of a movement that continues to grow and strengthen, while confidence continues to be expressed by the steady growth in membership, which has now reached almost 3.5 million.

We have also continued to have strong asset growth in 2016. Assets grew by over 7% in the Republic, and now stand at slightly over €14 billion – up almost €1 billion. In Northern Ireland, assets have been increasing for six consecutive years and were up by 6% in 2016 to over £1.3 billion.

Savings increased by 7%, to now stand at €12 billion in the Republic, while savings were also up by 7% in Northern Ireland and are now at over £1.1 billion.
Arrears have hit a ten year low in the Republic and are now back at September 2006 levels following a 27% fall in 2016. In Northern Ireland, arrears have fell by 6% and have now been falling for three consecutive years.

The 2016 results once again show that the credit union movement is very well capitalised. Capital reserves increased by 8.4% and now stand at €2.3 billion in the Republic, while in Northern Ireland, capital reserves increased by £11 million (6%) and are now at £184 million.

While we did have some regrettable news in 2016 with the liquidation of Rush Credit Union, it is clear from these year-end figures that overall the movement is strong and extremely well capitalised, while confidence continues to be expressed by our growing membership.

It is important also to put what happened at Rush Credit Union in context; this was an extremely rare occurrence. The Central Bank has stated that the situation there was at the extreme end of the scale, and that there are no other cases like it. And I would reiterate these comments. We are going into 2017 from a very positive position and will continue to succeed because we continue to change to meet members’ needs.