Credit Unions under threat
Credit Unions are under a grave threat to their very existence according to Sinn Féin election candidate Cllr David Cullinane. "I met with representatives of St Dominic's Credit Union this morning (Monday) at their request, and I was shocked at the information I received. For the last ten years Credit Unions have been struggling to continue to offer the service to their savers and borrowers that they have done for many years after new legislation restricted their lending practices. However, they are reaching breaking point, and unless changes are made to the 1997 Credit Union Act, they are under serious threat.
"Under the 1997 legislation Credit Unions are restricted as to the proportion of their loans that are to be repaid over 5 year and 10 year periods. These restrictions do not apply to banks and other financial institutions. What this means is that Credit Unions are finding themselves in breach of the law, and if nothing is done, they will have to start to refuse "top up" loans, and indeed many loans of 5 years and over.
"Credit Unions are an integral part of the fabric of our communities. For many families they are an essential part of managing their budget. Unless a Ministerial Order is issued to change the restrictions to their lending practices, then many ordinary decent people will find themselves in financial difficulties as Credit Unions are forced to refuse loan applications. This would have a devastating effect on people who will be forced into the waiting arms of loan sharks who charge exorbitant rates of interest, or to take on shorter term loans they cannot afford to repay, and end up unwilling loan defaulters.
Many Credit Union borrowers are on low incomes and have no equity to offer as security for bank loans. The Credit Union is their only source of borrowing.
"Last year it was revealed that €3.5 million was borrowed from Credit Unions in this country to pay for medical bills. People are borrowing for essentials like healthcare. This is not just about luxuries.
"Credit Unions have an excellent record of working with MABS to re-schedule repayments for borrowers who find themselves in financial difficulty, often because of ill-health or accident. Unless these changes are made, they will be unable to re-schedule loans in the same way. The Financial Regulator says that the aim is to reduce the number of delinquent loans, but the current regulations will increase them. At present less than half a percent of Credit Union lenders default on their loans. This is far less than most financial institutions."
Cllr Cullinane called on people to take action to defend their Credit Union before it was too late. "The Credit Unions will be writing to all their members soon to explain the position. I appeal to everyone to lobby their TDs, especially TDs from government parties, to change the 1997 Act through a Ministerial Order. We cannot afford to do nothing on this", he said, "Credit Unions have a special place in our communities. They are non-profit making savings and loan co-operatives run by volunteers for the people of the community. We have to make sure they Credit Unions survive in a form that will allow them to service the people of Waterford as they have done so well in the past." ENDS