Proposals to change the regulation of credit unions when the new financial regulator is introduced would erode its credibility as a not-for-profit movement in the public's eyes, the Irish League of Credit Unions said yesterday.
In a presentation to the Oireachtas Joint Committee on Finance and the Public Service, the league said changes to the legislation setting up the Irish Financial Services Regulatory Authority (IFSRA) had been proposed by the Government "without proper and timely consultation" with the movement.
The league's concerns arose after the Minister for Finance, Mr McCreevy, proposed that a new Registrar of Credit Unions be subject to IFSRA's control. The league said yesterday this was contrary to an understanding reached with the Department of Finance.
The statement followed comments by Mr McCreevy in the Dáil on Tuesday when he said "no agreement was drawn up". Mr McCreevy said he accepted that the league had an expectation as to what structure would be introduced.
But the league said yesterday: "Our understanding was that there would be 'an independent' registrar of credit unions, as currently, which would be a recognition of the separate, unique, and not-for-profit ethos of credit unions.
"Our view is that if credit unions are to be regulated with the same regulatory structure as 'for-profit' institutions \ banks, the nature of credit unions would be quickly eroded in the eyes of the Authority, the public, legislators and members.
"The proposals are contrary to the basis on which the credit union movement had been convinced to accept the Bill as published."
In a letter last month to all credit unions, league president Mr John O'Regan said the movement "will not" accept the changes.
A committee member and Fianna Fáil TD, Mr Conor Lenihan, said the league had received a "sympathetic" hearing at yesterday's meeting.
But the signals from the Dáil this week suggests that the Government has made its mind up. Mr McCreevy revealed on Tuesday that the European Central Bank had expressed reservations about the autonomous position of the registrar that was proposed in the original structure.
The Governor of the Central Bank, Mr John Hurley, and the interim members of the IFSRA expressed similar reservations, said Mr McCreevy.
He said: "In the context of these concerns I felt obliged to look again at the provision in relation to the registrar. I have signalled my intention to propose amendments on the committee stage of the Bill, which would alter the reporting relationship of the registrar of credit unions, to bring the position more fully within the framework of the IFSRA. The reporting relationship of the registrar would be similar to that proposed for the consumer director."
