A group of Northern Irish MPs met with the Treasury last week to discuss proposals which would restrict Credit Unions here investing in certain areas, and lead to the Credit Union losing £7m in earnings.
The deputation, led by Foyle MP Mark Durkan and made up of SDLP, DUP and Alliance representatives, met withthe Financial Secretary to the Treasury Mark Hoban at Westminster last week to discuss the concerns of local credit unions over the Financial Service Authority’s (FSA’s) proposal to restrict the investment types which Northern Ireland credit unions can invest in under new regulatory reforms.
The FSA proposal could lead to the loss of £7million earnings for credit unions here and would have a detrimental impact on the dividends payable to credit union members and the level of services available to members throughout the North.
On 31st March 2012, regulatory responsibility for credit unions in Northern Ireland will transfer from the Department of Enterprise, Trade and Investment (DETI) to the FSA. However, proposals in relation to investments – particularly around maturity periods – has caused much disquiet and concern for the Irish League of Credit Unions (ICLU) and their 103 credit unions in Northern Ireland.
Mr Durkan said:“The FSA proposal will restrict the investment types which credit unions in the North can invest in and also reduce the maturity periods from five years to one year for the vast majority of credit unions here.
“This proposal could have an extremely detrimental effect on local credit unions particularly in the current climate when due to lower borrowing levels credit unions are more reliant on the return from investments.
“Restricting the majority of credit unions to investments of one year maturity will considerably reduce the options open to local credit unions and the return available.
“In preparation for the transfer of regulatory responsibility, a joint Treasury / FSA Consultation Paper which describes changes to the way that credit unions here are regulated was issued last August.
“The Cost Benefit Analysis contained within this joint paper recognised that this proposal would result in a considerable loss of earnings for credit unions and indicated a loss of up to £6.97million (or up to 9.4% loss in income).
“Therefore, this proposal – due to loss of earnings for credit unions here – would have a resultant impact on the dividend payable to members and importantly the level of services available to members throughout the North.
“I led a deputation of Northern Ireland MPs to meet Mark Hoban to highlight the concerns of local credit unions and to press him to reconsider the unnecessary restrictions which are to be imposed on credit union investments here.
“I stressed to the Financial Secretary to the Treasury that the transition to the new regulatory set-up must be supportive and considerate of the needs of credit unions here in the North.
“I will be meeting local credit union representatives this week to discuss developments and will continue to press Treasury officials to explore the investment period issue with the hope of achieving an equitable solution.”