Sinn Féin councillor Dermot Nicholl has said that current proposals to change the way credit unions are regulated is causing a great deal of concern among its members in the Greysteel area.
The proposed changes which will effectively lower the dividend payable to members, will take effect when regulatory responsibility for credit unions in the North of Ireland transfers from DETI to the Financial Services Authority (FSA) on 31st March 2012.
Colr Nicholl said: “The proposed changes will alter how credit unions are regulated and these changes are the source of much concern among members from all sections of the community. I have met with officials from our local credit union in Faughanvale to hear their concerns.
“The FSA proposal will restrict the investment types which credit unions can invest in and reduce the maturity periods from 5 years to 1 year for the vast majority of credit unions. This would have a hugely detrimental impact on credit unions especially in the current economic climate when credit unions are more important than ever to the local community.
“By restricting the majority of credit unions to investments of 1 year maturity this will reduce the options open to credit unions and the return available.” continued Colr Nicholl.
“The FSA and Treasury consultation paper indicates that this proposal will result in a considerable loss of earnings for credit unions - up to £6.97 million. This will substantially reduce the dividend payable to members during these hard pressed economic times. The credit union movement is a valued part of our society and any threat to their services would be treated with grave concern. Certainly it is an invaluable facility in rural communities such as Greysteel and Glack and supports people who have had the credit crunch treatment from the mainstream banks. It also protects people in need from from turning to loan sharks. I do not believe there is justification to amend the current provisions which exist for credit unions with respect to investments. Credit unions have strong liquidity positions and have at all times made prudent investments in accordance with existing regulatory requirements.”