Regulatory Broadside Highlights Deficit in Irish Credit Union Safety and Soundness

In a recent speech the Irish regulator has sent a broadside into the credit union movement. The Regulator addressed issues that go to the heart of credit union safety and soundness.

In blunt robust language the Regulator has provided a catalogue of issues that need to be addressed by credit unions. Problems with lending practices, credit risk management, bad debt provisioning and investments until now reported on consistently in media, have now been officially acknowledged as posing serious concern to Ireland’s regulatory officials. The speach should be carefully read and understood by credit union boards as within it lies admonishment and implict warning that imprudent practices will no longer be tolerated. http://www.ifsra.ie/frame_main.asp?pg=%2Findustry%2Fin%5Fcru%5Fintr%2Easp&nv=%2Findustry%2Fin_nav.asp

Rather than availing of the opportunity to address the seriousness of credit union governance and operational risks once again the ILCU sought to downplay the speech by attacking the Regulator for not commenting on the debt consolidation mortgage practices of banks.

It would be better if credit union industry trade bodies and their leaders addressed the issues including the scale of credit union unsecured personal lending to first time house buyers over recent years as these loans are now highly exposed to potential losses.

Attacking regulatory officials undermines confidence in the credit union movement which is facing significant reputational damage from continuous media stories of serious problems. Such defensiveness only serves to heighten public awareness and concern over the safety and soundness of Irish credit unions.