The head of the Irish League of Credit Unions expressed "surprise" in private correspondence that a statutory consumer panel found favour with the Irish Financial Regulatory Authority's "tough" approach to the credit union movement.

League chief executive Liam O'Dwyer took issue with the Financial Services Consumer Panel after it praised a risk assessment examination of the credit union sector by the regulator, Pat Neary. The panel immediately rejected Mr O'Dwyer's remarks.

"I have on two separate occasions phoned you directly to discuss comments you made on the radio. You didn't return either of those calls," said the panel chairman Brendan Burgess in a letter to Mr O'Dwyer. The tension between the two bodies surfaced in correspondence published on the regulator's website.

It comes amid concern about the level of bad debts in some credit unions. An internal league report earlier this year suggested a large number of its members were ignoring their bad debt problems or were unaware of them.

Several weeks before the exchange of letters last month, the regulator asked the directors of 26 credit unions to examine whether they should take "remedial action" to deal with high levels of bad debt in their loan books. The outcome of that process is unknown at present.

The panel, which has a statutory remit to monitor the regulator's work on behalf of consumers, said in its 2006 review of the regulator's performance that the examination of the sector was timely and appropriate.

"Millions of consumers are members of these organisations and have billions on deposit with them," it said.

Mr O'Dwyer wrote to Mr Burgess, an accountant, saying that the body was clearly pleased with the "tough, proactive and direct approach" adopted by the regulator. "I am surprised that the panel would adopt such a position with little or no consultation with the trade and representative body for the credit union movement," he said.

Mr O'Dwyer went on to say it was interesting that the only consumer-owned and governed not-for-profit financial group should be singled out for such comment. "We have worked positively with the current credit union registrar but we find your encouragement of a get-tough policy with voluntary directors entirely inappropriate."

Such remarks drew a swift response from Mr Burgess, who said the tone and content of Mr O'Dwyer's letter suggested that no useful purpose could be served by a meeting between the panel and the league.

"The credit union sector is the sole sector with a dedicated regulatory officer within the financial regulator and is isolated by statute in terms of its status. Our report merely reflects this," he said.

"You say: 'No similar comment is made in respect of how any other organisation within the financial services sector is regulated.' In fact, we have made frequent comments and suggestions to the financial regulator on all other sectors."

Mr Burgess also rejected Mr O'Dwyer's contention that the panel's comments were based on a meeting with the Registrar of Credit Unions, Brendan Logue, whose analysis of the movement the league questions.

A spokesman for Mr O'Dwyer said he had nothing to add to the correspondence.