Introduction

There was much fanfare when The Credit Union (Amendment) Act was commenced in December 2023. This Act itself is the culmination of several years of work within the sector to bring a number of regulatory changes for Credit Unions. Key stakeholders involved include Government, the Regulator, the Credit Union Advisory Committee, Representative Bodies and Credit Unions themselves.

Now almost a year on and with three phases commenced, what do the changes mean for Credit Unions?

The Role of Credit Unions

The changes included within the Act will allow credit unions to continue to grow and evolve their individual business models and contribute to the overall sustainability of Credit Unions within the fabric of Irish Society. Credit Unions are seen as key providers of consumer credit with many expanding into mortgage and SME lending as well as advancements in other services such as current accounts, deposit accounts and other offerings. Credit Unions have very strong capital bases from which to do this and these changes allow the sector to make the most of this strong position.

What has changed?

Greater collaboration between co-operatives – the changes allow Credit Unions to refer members to each other. This is of benefit to members who may want to avail of services such as access to credit or current accounts that are not provided by their existing Credit Union.

Business lending – the membership rules have been relaxed to allow corporate bodies to become members of the Credit Union. While this is predicated on the corporate body being eligible to join the Credit Union by satisfying the requirements of the common bond, it does open the way for further lending to SME’s.

Loan Participation – Credit Unions will now be able to share the risk of lending to members by allowing Credit Unions to participate in lending to members of another Credit Union. This potentially opens up access for larger loans to be issued to members.

Corporate Governance – changes in this area means that the Board can meet less frequently with the timeframe between meetings extended from 6 weeks to 10 weeks and the minimum number of meetings which must be held reduced from 10 meetings to 6 meetings. Procedural matters have been improved also as the Board no longer needs to approve policies on an annual basis and can adopt a cycle of 3 years.

Administration around the approval of the annual accounts has been streamlined by removing the requirement for a member of the Board Oversight Committee to approve the annual accounts. Furthermore, the CEO or Manager is now eligible to be appointed to the Board which may assist some Credit Unions with succession planning.

Do Credit Unions Need to Do Anything?

In order for some of the changes to become effective, Credit Unions may need to amend their rules. Rule changes require approval by members at the AGM and have to be submitted to the Central Bank in the correct format to be lodged and given effect.

As Credit Unions prepare for their AGMs in the coming months, due consideration should be given as to what rule changes need to be made and approved by members so that an appropriate amount of time can be spent preparing the paperwork.

RBK and Credit Unions

RBK has a dedicated team of professionals that deliver services to credit unions. As the Credit Union landscape changes and evolves, we are committed to assisting our clients through the delivery of practical and pragmatic advice and support. These services extend to the following:

• Statutory audit
• Strategic planning
• Internal audit
• Risk Management
• Compliance management
• Human Resources and Payroll
• Due diligence and merger support
• Bespoke independent assurance engagements

For further information please contact a member of our Governance, Risk & Assurance team - (090) 6480600