A group of more than 20 credit unions is considering setting up parallel services to those provided by the 540-member Irish League of Credit Unions (ILCU), which meets this weekend in Killarney.

Some senior ILCU figures believe the group, the Credit Union Development Association (CUDA), could form the focus for a split.

CUDA has had contact with the Registrar of Friendly Societies about forming a new co-operative organisation. It declined an invitation to meet the review commission into the ILCU chaired by Mr Phil Flynn, which reported recently.

Membership of the group includes Lucan Credit Union, which has disaffiliated from the ILCU.

The ILCU is the body that provides services to the bulk of credit unions in the Republic and Northern Ireland. Its board has come in for heavy criticism in the review commission's report.

ILCU president Mr Jim McMahon has said the league must not split over the findings of the report, which concluded that trust is so low that some credit unions are actively considering leaving the league. Mr McMahon has said he expects this weekend's conference to be "rough".

Other credit unions in CUDA include Tullamore Credit Union, Mullingar Credit Union and Blanchardstown Credit Union.

"They are effectively forming a parallel organisation. The expectation was that the bulk of them would disaffiliate and that would have been a big political or psychological blow to the movement," said a source.

The source, however, said the commission's report had impressed many people in the movement and could lead to renewed confidence in the league.

Another source said a greater threat to the league than the CUDA was "that a whole middle line of credit unions would decide that the league was no longer relevant to them. The middle line is where the focus should be."

The extent to which the league takes on board the recommendations made in the commission's report will be the crucial factor in deciding if individual credit unions disassociate from the league, several sources said.

Mr Flynn is scheduled to address delegates at this weekend's conference but voting on the recommendations in his report is being held over to a special delegate conference in June.

Meanwhile, the dispute over expenses claimed by board members is continuing, according to sources. Two directors who sought details of expenses claimed by board members were refused the information earlier this year. The directors who sought the information were subsequently told by the board's legal advisers that, under the league's rules, they were entitled to the information.

However, the board has decided to get advice from a senior counsel so the matter will not be resolved until after this weekend.

ILCU affiliated credit unions have about 2.2 million members and total assets exceeding €6.6 billion.