A large number of credit unions in Ireland believe the risk-assessment system operated by the Central Bank does not reflect the performance-based reporting taking place within credit unions.

According to a survey by accountants Mazars, just under 20 per cent of the 140 credit union chief executives and managers said the Prism system did not adequately take account of performance-based reporting in credit unions, with 57.5 per cent saying it “somewhat” did.

Mazars said the finding was “timely in the context of the recent findings in the peer review by the International Credit Union Regulators’ Network, which highlighted the need for the Registrar to improve communications and engagement with credit unions”.

Some 92 per cent of credit unions were “highly confident” in their ability to identify and report on financial performance.

Performance measurement

But the survey noted that credit unions needed to further strengthen how they measure performance in areas such as members and community, internal processes, and knowledge and growth.

The survey also found that credit unions measure their success through membership growth, use of online technology and dividend policy. And while credit unions invest in training and development for management and employees, just 13 per cent link pay to performance.

More than 2.9 million people in Ireland are members of credit unions, with combined savings of close to €11.9 billion. Credit unions employ about 3,500 people, with an additional 9,200 volunteers involved in the movement.

Commenting on the survey results, Justin Moran, governance, risk and internal controls director of Mazars, said: “Credit unions are seeking to differentiate themselves from the banks through an increased focus on understanding member and community needs.

“This focus is also reflected through investment in new products and technology platforms to enable them to compete more effectively.”

He said a focus on assessing membership satisfaction, understanding changes in membership profile and maximising opportunities to contribute to community initiatives would assist credit unions in maintaining their identity and differentiating their offerings from competitors.