Bob's Blog

Kildare’s 150,000 credit union members need to hold their institutions to account, says local financial adviser

In the light of last week’s emergency appointment of a ‘Special Manager’ by the Central Bank to Newbridge Credit Union because of liquidity concerns, Bob Quinn of Money Adviser urges the 150,000 members of County Kildare’s 13 credit unions to take a more proactive role in the running of their institutions so that they do not find their own credit union under the microscope of the Regulator.

Unlike other financial institutions such as banks and building societies, the board of directors of a credit union is elected from the membership. Each member has therefore the opportunity to become a director or, at minimum, to hold to account the elected members of the board.

“Credit union members in this county need to be making greater demands on their directors”, said Quinn, an independent financial adviser with experience of credit unions all over Ireland. “The time has come for them to reconnect with their credit unions and to find out what is going on and if they don’t like it, to hold those directors to account”. A good time to do this is at the AGM, commented Quinn. “All members of the board are obliged to attend the AGM so this is the ideal opportunity to ask the hard questions.”

It is each member’s right to satisfy himself that the directors are equipped to run the institution and to express his view of the direction it should be taking. “If you’re still not happy,” urges Quinn, “then put yourself forward to become a director.”

It is reported that Newbridge Credit Union lent to borrowers for commercial property during the boom and that these loans are not being serviced, leading to the shortfall of approximately thirty-one million euro between savings and the loan book. Credit unions were established to be small, personal lenders. “Where credit unions deviate from the model of low risk, locally based lending, that’s when things can go wrong and they can attract the unwanted attention of the Central Bank,” said Quinn. An interim report on the sector was delivered to the Minister for Finance, Michael Noonan TD last year. The final draft is expected in March when considerable consolidation of the credit union movement is expected.

While there is no suggestion at present that a winding down process of Newbridge Credit Union is likely, its members can take solace from the government’s Deposit Guarantee Scheme, which covers savings of up to €100,000 in the event of the third biggest credit union in the country being forced to wind down.