Q&A: Others will fear legal action


Q&A: Others will fear legal action

St Raphael's
St Raphael’s

Q: Why is the leading representative body for credit unions suing one of its former members?

A: The representative body for the sector, the Irish League of Credit Unions, told its member credit unions recently it was issuing High Court proceedings against the largest credit union in the State, the St Raphael’s Garda CU. At issue are claims by the league that it is owed various fees from St Raphael’s. It is understood these amount to €1.5m.

They mainly consist of fees in relation to membership subscriptions and contributions to the league’s bailout fund for troubled credit unions, the Savings Protection Scheme (SPS). St Raphael’s denies the claims and has vowed to fight the case in the High Court.

Q: Do other credit unions owe fees to the Irish League of Credit Unions?

A: A large number of credit unions owe SPS contribution payments to the league.

The figure for credit unions in arrears on their SPS contributions is close to 80pc – almost a third of the active CUs in the State. Some credit unions have major doubts about how SPS funds have been used lately. A case in point is the fact that the SPS fund was used in efforts to save Charleville CU, in Co Cork, but the credit union closed, and the SPS fund is set to lose money.

Q: Has the league ever taken legal action against a credit union before?

A: It has never happened before that the representative body has taken legal action against a member credit union, or a former member.

The unprecedented move has led to fears that other credit unions that owe fees to the league will face similar legal action. The league has 296 credit unions affiliated to it in the Republic, but not all are active.

Q: What does the breakout of legal warfare say about the movement?

A: It is a bad sign when a body set up to represent and foster the growth of credit unions sues one of the lenders.

Credit unions are under huge pressure. They are struggling to lend out money. This comes at a time when savings levels are so high that some credit unions are restricting the amounts of money members can leave in them.

Irish Independent

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