The Bill will also give the Minister for Finance the authority to set a minimum interest rate for the industry, currently fixed at 1 per cent per month. This will give credit unions more flexibility to price risk in a rising interest rate environment, the Department said.
“For years credit unions have operated within the confines of outdated legislation which was not fit for purpose in a modern era,” said Kevin Johnson, chief executive of Cuda. The Bill “offers a unique opportunity to credit unions to offer and deliver more benefits through enhanced products and services to existing and future credit union members,” he said.
“Credit unions have a strong and trusted brand, they are present in communities throughout the country, and have been developing their product offering,” it said. “The credit unions are already a significant player in consumer credit, and they are making inroads in the current account, mortgages and SME segments of the market.”
However, the average credit union in the sector in the Republic had just €27 out on loan for every €100 of assets as of September 2021, close to historically low levels, according to Central Bank figures.