The stockbroker, credit union, Ombudsman and ILCU

The Ombudsman ruling that finds against a leading stockbroker for the manner in which it appears to have provided investment advice to one credit union on perpetual bonds has certainly livened things up. Much has been written with links to various articles included in the media section of this blog.

One aspect however remains largely unspoken of. That is the ILCU and its public pronouncement that perpetual bonds were appropriate investments for its member credit unions to make. Indeed its internal communications were extensive in fulsome praise of the income possibilities that these bonds provided. Much of its communciations material, it seems was not written by it, as it didn’t have the expertise. So certain was it, that it even invested some of its savings protection fund in perpetual bonds. Which now must seem a bit like betting your Granny’s nest egg at the Galway Races.

But let’s forget about the bonds for a moment and look at the ILCU itself. It is not a company at all. Despite its annual report and accounts talking up “Group” performance it remains an unincorporated body. It is, in other words, a club for credit unions. A co-operative of co-operatives. (Or as one wag put it, a club for credit union voluntary directors…but that’s another story).

Now this club is managed by a club committee referred to as a Board of Directors. But the club can only act on its members behalf. It doesn’t have a separate existence. Its members tell it what it can do and agree to be bound by its actions providing they are in keeping with the actions agreed in the “book of rules”. Of course custom and practice is also an aspect of its modus operandi.

This club committee entered into an arrangement whereby the club would provide services to its members. Services, its members agreed to use and pay for. It just so happens that the club gets a little of what they pay by way of fee, or commission or administration charge from the service provider. This income covers its expenses along with its annual membership fee. It runs a benevolent fund for troubled members into which they must also pay and it is assumed the club benefits also.

One of these services was investments. The club entered into an arrangement with a reputable stockbroker to provide investment services both to it and its members. The club is a partner in this business arrangement. Jointly it created a service called Central Investment Management or CIM for short. The relationship, it seems, is such that the club takes money from its members through its own accounts and passes this onto the stockbroker. It accepts and transmits orders for money. It gets paid for doing this. It’s about .16% of all the money its members have invested with the stockbroker, which is about €2.1bn give or take a few euro.

The members because they have agreed that the club should do this, trust the club and also of course trust the service provided. Over time, they have become very familiar and satisfied with the service. A custom and practice grew where members would invite the stockbroker down to have a meeting and provide it with the opportunity of discussing its latest offering. The club even allowed the service provider to not only tell its members how their central fund was doing but to also tell the members about other investments on offer through its communications channels. All this was done under the umbrella of the Central Investment Management service. The club members it seems believed the additional investments were all part of the central service and the club supported this perception.

The club is in effect the collective of members working together for their mutual benefit. Is it not the case then that the member and club are indistinguishable from one another? Could it be the case that the member is bound by and through their own actions which through custom & practice binds them to the actions of their club when using services designed for their use and agreed by them? Could it be the case that as the club committee announced that perpetual bonds were appropriate that the club member could act accordingly?

Could it be the case that the relationships between stockbroker and club are altogether different to that of “personal client – investment adviser” but in fact more of an outsource business relationship with one providing services the other would prefer not to provide itself – or that its members would prefer the club didn’t provide but outsourced. If this is the case then what jurisdiction, if any did the Ombudsman have ? Could the Ombudsman have adjudicated on a business transaction that falls outside the scope of private investor - investment advisor relationship ?

There are of course other considerations here. The most obvious of which is the fact that credit unions are regulated financial firms – credit institutions. Their boards have a ficuciary duty of care to ensure the firm has the necessary expertise and competence to carry on the business of a credit union. Indeed the law provides for credit unions to invest, albeit restricting them to the Investment Trustee Order. The implication is they have the wherewithal to make decisions based on a competence to do so. Sure the Regulator issues more restrictive guidlines in 2006 but they have no statutory basis. Sure also the Regulator considers credit unions as "private investors" but its dosenlt have the powers to enforce this consideration.

Is not the presumption that the board will provide for the expertise to make decisions on investments. Indeed can a board of a credit union rely on the protection of “private investor” or what has been called “layman” status even where its members are laymen ?

Surely on being appointed a credit union director, a person loses their layman protective cloak and takes on a cloak of an all together different fiduciary hue. If not then could it not call the entirety of board duty of care into question – were does the boundary of private citizen stop and board director take over? Can it be said that boards are not responsible for decisions made concerning the purchase of all professional services or lending decisions for example loans to incorporated bodies?

If the Ombudsman is right and credit union directors and management are laymen – then what is the ILCU but a club for credit unions who are populated by laymen ? Sre credit unions merely layman business entities ? Could it be a decision rooted in a consideration of what credit unions were prior to 1997, rather than what they have become or should be today ?

Surely credit union boards and their management are accountable and responsible for ensuring they have the expertise to carry on the business of a credit union which has always included making investment decisions. Whether they actually have the expertise to do so, seems to be another issue altogether.

The stockbroker may well win its HIgh Court appeal, bouncing the issue back where it may well belong in the lap of credit union boards, their management, trade bodies and regulator.

Net Savers Dominance - The Irish Credit Union experience

Net Savers Dominance – The Irish Credit Union experience

It is a commonly held view and wisdom that a net-savers dominance on a credit union board optimises financial stability.

This may be the case when the credit union is operating competitively and achieving the desired benchmark lending rates of 70% + in loans to total assets. But what happens when the critical ratio declines rapidly as it has in the case of Irish credit unions?

Well it seems another credit union phenomena occurs. That is the impact of boards dominated by savers and extremely low levels of lending.

Used to paying high dividend rates for demand type savings, Irish credit unions responded to historically low interest rates in recent years by maintaining a higher dividend than should have been paid.

In 1999 the Irish credit union loan to total asset ratio was somewhere around 64%. Today this figure has dramatically declined to below 46%. In some cases it’s as low as 18%.

Once lending volumes dropped credit unions did two things. The first is they invested surplus fund in high risk and illiquid portfolios chasing higher investment income and the second was engage in higher risk lending including business and speculative construction finance. In addition many credit unions ignored the loan term limits, issuing longer term loans in defiance of laws limiting the percentage of loan portfolios over 5 and 10 years. Thus the decline in loans to total assets resulted in a dramatic increase in credit, liquidity, investment and interest rate risks.

In many cases credit union lending is now so low it has led to the emergence of a new form of co-operative called the “savings club”.

Evidence of the shift in credit risk profile has emerged in worsening loan delinquency experience where over 73% of credit unions reported they were in excess of the 5% loan delinquency PEARLS threshold triggering regulatory intervention. The Regulator has consistently highlighted concerns over lending practices with regulatory language becoming increasingly robust and strident. Significant credit union investment losses have been regularly reported on in media.

Deeply concerned with the twin rise in investment and credit risks, the Irish regulator responded by issuing investment and lending guidelines. Moreover in agreeing to higher loan term limits the Irish Government insisted that higher limits had to be linked to key safety measures of capital (reserves) and loan delinquency issuing a warning that any further non-compliance with the law would not be tolerated.

What has been created is a vicious cycle since 2000. Faced with rising savings but low loans growth, many maintained high lending interest rates, credit worthy members went eslwehere, exacerbating the decline in lending. This triggered an increasing reliance on investment income and higher risk lending to plug the gap in overall income required to maintain dividend rates. Such behaviour has led to justifiable observations that many credit unions are exploiting their borrowers many of whom are the new working poor.

Unwittingly and in ignorance of the inelasticity of demand deposits to interest rate movements and buoyed up by special tax treatment of accounts (where tax is not deducted at source) savings mushroomed as Irish people became wealthy almost overnight.

It was a naïve and ill-thought out strategy that has dramatically undermined the Irish credit union movement and now threatens it existence. Indeed it hardly qualifies as a strategy as this means it was planned when it wasn’t. It was a result of the illusion of success that fooled many into believing and behaving as if credit unions were above competing in the market.

Why has this happened? As the Irish Tiger economy took off, credit unions were left trailing in the wash. A decade of apparent success from the 80’s and early 90’s blindsided the movement. Credit unions failed to invest in building the business competencies required to expand their core offerings to include credit cards, home mortgages and better savings & investment products. Though they could have acted as mortgage or insurance arrangers during the recent boom years, the first agency agreements where not announced until 2006 years after the Celtic Tiger commenced.

Allied to a failure to expand products and services is a failure to invest in modernising business operations. Consequently credit union operating costs now exceed core operating income. Credit Unions have also failed to create fee earning services, or look for some degree of cost recovery. Fee income is less than 1% of total income. Credit unions continue to finance free life insurance cover beyond reasonable limits and stubbornly refuse to move to member pay models.

The systemic risks of the dominance of aging boards of net-saver directors maintaining a high dividend rate, a declining loans ratio, higher risk lending, poor lending practices, worsening bad debts, uncompetitive lending rates, under-investment in IT and modernisation of operations, overinvestment in buildings and investment losses are such that many fear that a tipping point will soon be reached beyond which the movement will spiral into a serious crisis. This is a fear shared by people in Ireland and within the international credit union community.

Such a scenario would inevitably trigger external turnaround intervention with all its negative fallout for credit unions. It could well be that the social capital created by the movement will be frittered away and its one time success consigned to a historical footnote.

Credit Unions Do Not Have Customers

Are credit unions behaviours attitudes and governance rooted in the past ?

“credit unions do not have customers, credit unions have members; the
members of a credit union own the credit union unlike the customers of other financial service providers…they are run by volunteers. (RESPONSE OF THE IRISH LEAGUE OF CREDIT UNIONS TO THE DEPARTMENT OF FINANCE’S CONSULTATION ON: FINANCIAL SERVICES LEGISLATION: CONSULTATION ON CONSOLIDATION AND SIMPLIFICATION BILL )

This wasn’t written in 1957, 1967, but in 2005. At the heart of this lies a belief and associated behavior that credit union members are different. So different that don’t need protection.

This is why credit unions do not produce transparent marketing, product information or decent annual accounts and continue with out of date practices that have been eradicated elsewhere.

Of course credit unions never overcharged loan interest (some have consistently) nor failed to repay cancelled RPI premiums (many have had to refund millions) and never take money from their savers accounts without their permission (many have and continue to do so).

But of course as they are “run by volunteers” their customers are not expected to require the same level of protection they have as customers of banks, building societies, insurance companies and brokers.

It’s a bit like saying that boards of voluntary hospitals don’t need to provide the same patient safeguards as private hospitals nor should their patients expect the same care and attention from their nurses and doctors.

In the same document ILCU continues in referring to any new credit union regulations:

“Many credit unions would also face similar difficulties in the financial services market. This is evidenced by the sharp reduction of credit unions in other jurisdictions (United Kingdom, Australia, United States, Canada and New Zealand) following the imposition of new regulatory requirements.”

There is quite a body of empirical evidence that credit unions are safer and have grown rather than declined under new modern credit union regulatory requirements. Quite frankly this Irish credit union argument is without foundation and unsupported by fact. What the ILCU all too conveniently ignore is the introduction of new regulations was a catalyst for modernisation, professionalisation, development and growth of all the movements listed. Of course the sentence to be correct should read “this is evidenced by a sharp reduction in the numbers of credit unions”…the word “number” has been conveniently omitted. Of course numbers delined for other reasons other than new regulations ...but saying so would weaken the case.

It is well known that Irish credit union leaders use misinformation and selective data in support of their case and defense of position. Their language is in turn translated by credit unions into misleading consumer information such as “your savings are protected up to €12,700”.

“Members” are not customers !
It seems then that once people become customers of an Irish credit union they unwittingly abdicate their rights as citizens to consumer protection and become "members".

The reality is that the majority of credit union directors cannot distinguish between the member as owner and member as customer and govern accordingly.

Try telling the people who save, borrow, buy insurance, foreign exchange and arrange mortgages that they are not customers or consumers and are not entitled to the same level of consumer protection as customers of banks.

Explain why, as the credit union board are “unpaid volunteers”, their life savings are not to be guaranteed by a state backed deposit insurance scheme.

Explain also why credit union boards and management are still not required to be authorised under a fitness and probity test when all other credit insitutions must comply.

Try telling the public why it is that the top 100 credit unions controlling €10bn+ of over a million peoples’ life savings are not to consider their “members” as customers. The largest credit unions after all have over €220m in savings with over 25,000 "members".

Believing that members are not customers has to stop. Credit union directors and their trade bodies must demonstrate they truly understand the difference between the member as owner and the member as a citizen,customer and consumer. Only then will proper credit union governance emerge.

Regulators Speach to National Supervisor Forum

The full text of this important speach is reproduced here as published on the IFRSA website:

National Supervisors Forum
Annual General Meeting
3 & 4 November 2007
Speech by Brendan Logue
Registrar of Credit Unions

I am very pleased to be invited here again to your AGM which we regard as an important event for all supervisors and their credit unions also. It is very gratifying to see the National Supervisors Forum going from strength to strength as is clearly evidenced by the huge attendance at this weekend’s event.

Much has changed in the financial world since we met this time last year – the international markets in credit have contracted sharply giving rise to the so-called credit crunch.

Many blue chip shares have fallen sharply and the value of other investment instruments have been destabilised. It is therefore opportune to look carefully at the new financial environment in which credit unions now find themselves.

Anyone who has visited the United States over the past 10 years and who has watched television, cannot but have been struck by the heavy advertising of loans secured by mortgages on residential property. Very seductive advertisements, promising a reduction in monthly repayments by rolling up credit card and other debts into a single easily repayable mortgage loan, have been heavily promoted. These offers were pitched at people who, in many instances were not required to show proof of earnings or who already had a poor credit history. Loans for house purchase were also promoted in the same fashion. The American Dream was offered to all in the form of owning their own house and paying for it at affordable repayment terms.

However, many people who availed of these offers, foolishly or carelessly, signed up to mortgage backed loans not realising that, in many instances, and contrary to the normal American practice, the loans were based on variable rates of interest which kicked in after an initial fixed interest period. The frenetic promotion of these financial products reached such a pitch that the so-called Ninja mortgage was born - “No income / No job / No assets”. Lending was done on the sole premise that the property on which the loan was secured would always hold its value.

All that it would take to bring this house of cards toppling down was an increase in interest rates. Suddenly the repayments that many borrowers thought were fixed, increased dramatically.

This credit crisis might have been more easily contained within the borders of the US had it not been for the repackaging and onward sale of these sub-prime debts by the primary lenders to other financial institutions internationally. The accelerating collapse of the sub-prime market in the US very rapidly affected the worldwide banking system, causing serious losses to many European banks and resulted in the need to rescue others such as IKB in Germany and Northern Rock in the UK.

There are lessons for the credit union movement in what has happened. These lessons relate both to lending and investing by credit unions. Lax standards in lending inevitably lead to losses for the lender and misery for the borrower. Reckless investment practices have the same effect.

Consequently I would like to address some remarks to you on both topics. The relaxation, in recent years, of the lending terms operated by credit unions has increased the risk profile of the loan portfolio of the movement. It is not so long ago that credit unions made loans on much stricter terms than is currently the case. Loans were limited to a low multiple of the existing savings and income of the member. Business lending, such as is sometimes seen today involving loans over six figures, was unknown. Loans for speculative property developments were equally unusual.

The substantial inflow of liquidity to credit unions together with certain ill conceived strategies within the movement have increased the pressure for credit unions to move into the mainstream lending market, in competition with the banks. This has sometimes been done without due regard to the borrower’s ability to repay, in the absence of any credible credit check or without the taking of viable security.

Credit unions should now critically re-examine their credit policies in the light of the changing external environment. The Irish economy is not suffering a credit crunch to the same extent as the US but it is clearly the case that credit is tightening and that bad debts among credit unions are increasing.

Based on our recent inspections of credit unions we have found that in all cases where we have commissioned an in-depth analysis of a credit union’s loan portfolio, that substantial additional provisions for bad and doubtful debts have been identified.

The Credit Union Act, 1997 lays specific obligations on individual supervisory committees in credit unions to inspect and verify the accuracy of the books and records of the
credit union. Specific emphasis is laid on the verification of the loan records of the credit union.

In order therefore, to assist credit unions in the governance of the credit and credit control functions in the more difficult economic environment now developing, my department has issued a new guidance note on the credit and credit control functions. This document will have been received by credit unions within the last week. The guidance note should assist the relevant committees for the lending and credit control functions.

I recommend that all supervisory committees familiarise themselves with the contents of this easy-to-read document. I particularly wish to draw the attention of supervisors to the sections on Provisions for Bad and Doubtful Debts, Commercial Loans, Lump Sum Repayment Loans, Loan Rescheduling, and Security for Loans.

It may be the case that with margins in credit unions declining, that pressure may be felt by boards to maintain the dividend level of the credit union over and above that which would be fully justified by the underlying financial results of the year in question. Such pressure may result in a temptation to artificially increase the credit union’s surplus, by a variety of means.

The understatement of the provision for bad and doubtful debts is a feature of this tendency which we have commonly detected in our inspections. Various unacceptable devices to achieve this have been uncovered by our inspection teams. These include inappropriate rescheduling of overdue loans, the issuance of top-up loans in arrears situations or the exclusion from the provision calculation of overdue loans where security is held.

Supervisors should be alert to such practices and it should always be borne in mind that the board has a statutory obligation to show a true and fair view of the financial affairs of the credit union and to account for the savings of their members. The interests of the credit union are not served by any fudging of hard issues facing it in respect of bad debts or any other issue.

I would also like to draw the attention of supervisors to their obligations in respect of investments held by their credit unions.

Investments now constitute the single biggest asset class held by credit unions and, as such, require the same degree of oversight and analysis as do loans. It is vitally important that consideration of the security, liquidity and risk profile of the investments of credit unions are given due care and attention by supervisors. In many respects the overview of the investment process is a more difficult task than that of loans. Investments come in many types from many product producers and can contain a wide variety of terms and conditions. Add to this the fact that the management of many investments, once purchased by the credit union, are outside the control of the credit union.

It is therefore very important that before any investment decisions are made that full cognisance is taken of all the terms and conditions of the investment. All investments
should carry a capital guarantee by a reputable guarantor and be available for encashment without excessive penalties, if the need arises, in accordance with the credit union’s
investment policy. Of equal importance is the need for an assessment of the competence and probity of any investment advisor which the credit union uses. Scrutiny of the degree
to which such advisors are independent in the provision of investment advice is prudent. It is not acceptable for a board to blindly follow the advice of an investment advisor or broker. It should be remembered that in such situations the broker is generally not exposed to the risks associated with the investment. The authority for investment decisions and the responsibility for the consequences of such decisions rests with the board of the credit union. This responsibility cannot be delegated or outsourced.

Certain specific issues of a technical accounting nature have arisen with regard to investments. Investments must be valued in the credit union’s balance sheet in accordance with the stipulations of Section 110 of the Credit Union Act. This section stresses two important principles: firstly, investments must be accounted for in a prudent fashion and secondly, no unrealised surpluses may be taken into the income and expenditure account. Both of these principles have been tested in recent times in respect of certain investment instruments held by some credit unions. A number of credit unions hold investments which do not deliver a return on a year-by-year basis but promise a return on maturity of the contract at the end of a defined period. In many instances such periods may extend as far out as 6 or 7 years from the original purchase date of the instrument. Arising from this, it is now not uncommon for credit unions to accrue such returns in their income and expenditure account, before they are received. If however, the contract under which the investment was made is conditional in any way, e.g that the investment must be held until maturity before any return crystallises, then it could be questioned whether it is prudent to accrue such income. Whatever about this point, such accrued income should never be used to support the payment of a dividend. All such accrued income should be credited to a reserve pending realisation of the return and not distributed until then.

Another area where concern exists about accounting for investments is the question of their valuation. Investment values should be stated in the balance sheet at the lower of cost or net realisable value. This is the normal and traditional accounting convention in respect of the valuation of investments held by credit unions. We have noted that some credit unions have unilaterally adopted the accounting convention known as “Fair Value” under whose provisions it is acceptable to recognise gains in investments which have not been realised. Significant doubts arise as to the legality of the application of Fair Value accounting to credit unions and subject to further legal review there is a strong possibility that such accounting treatment will be found to be in breach of the provisions of Section 110 of the Credit Union Act. We are currently in discussions with representatives of the accounting profession on this matter and it is likely that an exposure draft of a practice note on the audit of credit unions’ financial statements will be issued soon by the Institute of Chartered Accountants which will refer, among other matters, to this issue.

In this regard supervisors will be aware that the Irish League of Credit Unions issued a circular concerning the accounting treatment of investments dated 27 September 2007. This circular implies that Fair Value accounting is an acceptable policy for credit unions. I would like to point out that this circular has no standing with the Financial Regulator nor indeed within the accounting profession.

Supervisors as signatories of the credit union’s annual accounts have an implied obligation to see that proper accounting standards are employed. I urge all supervisors to see to it that the provisions of Section 110 of the Credit union Act are strictly observed. Should supervisors be in
any doubt as to the interpretation of these provisions they should consult their auditor or their legal advisor. Staff at my own office will be happy to discuss the issues surrounding this matter with supervisors or directors, should they so wish.

I know that many supervisors perform their role in sometimes difficult circumstances.
I would therefore like to reassure supervisors that their role is highly valued by the Financial Regulator and you can be assured that we will do what we can to support supervisors
in the discharge of their statutory duties.

My general impression with regard to the evolution of the relationship between credit unions and their members is that more emphasis is placed on the growing of lending and other
services to members than is placed on the rights of savers.

The role of the supervisory committee is an important counterbalance to this tendency and one which is vital for the protection of savers’ interests.

Could I thank you again for this opportunity to address this meeting. I would be happy, if time permits, to address any questions which delegates may have on the matters I raised.

The family silver is now needed .....

The family silver is now needed….

From 2000 to 2007 credit unions adopted a poorly conceived response to a low interest rate environment. The majority pursued a dividend maximisation policy which saw rates as high as 3-4% being paid on what are essentially demand deposits. It is widely known that demand deposits are relatively inelastic with average durations of about 2.8 years. Competing bank rates were about .50% and even lower for equivalent deposits. During this time, bank demand deposits increased at about the same rate as credit union deposits.

Credit unions paid a rate many times higher then they needed to and in doing so failed to build reserves, creating the cushion required for when times got tougher. As they now have.

For example had the dividend payout been lower by say by 1% then the movement would have generated an additional e€300m in reserves. Furthermore had the ratio of loans to total assets been maintained at 64% this would have generated an additional e€200m in reserves. Much of this could have been used to invest in improving operating efficiences, modernistion of IT capability, proper marketing and revitalised products.

In short credit unions could have competed for loans and have assembled the resources necessary for modernisation but did not. They now face a far less benign market in 2008 with a very thin reserve base and still have to invest in modernisation.

As it stands, operating expenses are now greater than core operating income, fee income is less than 1% of total income and many credit unions have illiquid investment portfolios with real returns under some pressure. There are signs that the loan to asset ratio has stopped declining but whether this represents an increase in loan demand or a decline in savings growth or a combination of both is uncertain.

There is clear evidence from reported delinquency experience that many credit unions have incurred significant loan losses that have yet to be written off. The lead delinquency indicator has not been translated into bad debt provisions or write offs. The Regulator once again recently highlighted the issue :

“Based on our recent inspections of credit unions we have found that in all cases where we have commissioned an in-depth analysis of a credit union’s loan portfolio, that substantial additional provisions for bad and doubtful debts have been identified……..It may be the case that with margins in credit unions declining, that pressure may be felt by boards to maintain the dividend level of the credit union over and above that which would be fully justified by the underlying financial results of the year in question. Such pressure may result in a temptation to artificially increase the credit union’s surplus, by a variety of means. The understatement of the provision for bad and doubtful debts is a feature of this tendency which we have commonly detected in our inspections. Various unacceptable devices to achieve this have been uncovered by our inspection teams. These include inappropriate rescheduling of overdue loans, the issuance of top-up loans in arrears situations or the exclusion from the provision calculation of overdue loans where security is held.” (National Supervisors Forum, Annual General Meeting 3 & 4 November 2007, Speech by Brendan Logue Registrar of Credit Unions)

The worry is that a lot of credit union lending was business and speculative property development finance which is now highly exposed to the sharp decline in construction and house sales activity. It is also widely known that millions were lent to first time house buyers to finance the balance of their 100% mortgage requirements and household furnishings etc. These borrowers are now facing the very real probability of negative equity as house prices have declined rapidly and interest rates risen. Under increasing pressure to finance loan repayments they will beging to default on unsecured personal loans rather than put their homes at risk.

Some estimates of the scale of potential write offs are between €150-200m of irrecoverable unsecured loans. Even were loans have been secured questions have arisen as to the reliability of the security taken by many credit unions. The rise in Judgements being obtained by credit unions is indicative of increasing loan default rates.

Reported investment losses are adding to the heady mix of issues to be dealt with.

A recent media article may be right; in a credit crunch perhaps people will once again turn to credit unions for their loans. Thing is credit unions may not in a position to safely meet a surge in demand and would be foolish indeed to respond without careful analysis of borrower repayment capacity. Is this is feature of current loan assessment processes? Well only 16 credit unions’ are members of the Irish Credit Bureau.