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Credit unions joining Irish Credit Bureau

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  • 28-07-2004 8:27am
    #1
    Victor
    Registered Users Posts: 78,371 ✭✭✭✭


    Any of yis planning to pay for the mortgage deposit with a credit union loan is screwid.

    http://www.thepost.ie/web/DocumentView/did-539308876-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp
    Credit unions wary of joining credit bureau
    25/07/04 00:00
    By Louise McBride

    About ten of the 430 credit unions in Ireland applied to join the Irish Credit Bureau (ICB) in the last two weeks, The Sunday Business Post has learned.

    However, neither the Irish League of Credit Unions (ILCU),the Credit Union Development Association of Ireland (CUDA) nor the ICB would confirm the exact number or identify the credit unions.

    The ICB said it would be ``disingenuous'' to do so.

    According to the ILCU, before this year, credit unions could not be part of the ICB because confidentiality provisions in the Credit Union Act prevented them from doing so.

    However, as credit unions are now regulated by the Irish Financial Services Regulatory Authority (IFSRA), credit unions can join the ICB, though they are not obliged to do so.

    David Matthews, business unit manager with the ICLU, said: ``The advantage of joining the ICB is that credit unions will be able to make more informed lending decisions as they will have a fuller picture of a member's total indebtedness and will be aware of any repayment problems that a member might have with other members.''

    The ICB monitors loan applications and repayment histories and its members can check the credit record of loan applicants.

    Most loans from commercial lenders are registered with the ICB.

    However, up to now, credit unions have been unable to apply for membership.

    A move to join the ICB could help prevent the debt problems experienced by some credit unions.

    Credit unions wrote off bad debts of around €18 million in 2003 and they are expected to write off €20 million in bad debts this year.

    In September 2003, the total loan book for credit unions was around €5 billion. The majority of these loans were unsecured.

    ``Like all lenders, credit unions experience bad debts from time to time,'' said Matthews.

    ``Occasionally, bad lending practice has led to higher than average debts, but none so serious as to threaten the viability of the credit union.''

    The lending practices of a number of credit unions have come under the spotlight recently, chiefly those in Gurranabraher in Cork and Firhouse in Dublin.

    The Garda and Revenue Commissioners are investigating possible serious financial irregularities at Firhouse credit union.

    According to its latest annual report, the credit union has bad debts of €3.6 million.

    In 2003, the Garda Bureau of Fraud Investigation investigated lending practices at Gurranabraher Credit Union.

    In one case, a loan of €127,000 was granted to a credit union member who had €127 in savings.

    But according to the ILCU, no action was required by the Garda following the investigation.

    It has also been reported that Mitchelstown credit union experienced administration and computer problems this year.

    The IFSRA has been involved in a restructuring and reform process for Firhouse, Mitchelstown and Gurranabraher credit unions.

    ``We are naturally concerned where a credit union has operational difficulties,'' said a spokeswoman for the IFSRA.

    ``We would have no objection to credit unions applying for membership of the ICB and we feel it would be useful for credit checking.''

    The majority of credit union loans are for small amounts, with about 40 per cent being for amounts less than €1,000, according to the ILCU.

    The ILCU, of which Liam O'Dwyer is chief executive, does not anticipate that membership of the ICB will isolate most credit union borrowers.

    ``Small borrowers are unlikely to be affected by a credit union's membership of the ICB,'' said Matthews.

    ``It could affect larger borrowers who are also borrowing from other institutions. However, the ICB report only forms a small part of the lending decision process.''


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