Bottles flying through the air at an annual general meeting is not the sort of image most associate with successful financial organisations.

However, the temptation to look at last Monday's meeting of Gurranabraher Credit Union and scoff should be resisted. The credit union movement may tend to wash its dirty linen in public, but that does not mean it is not a very significant and successful element in the State's financial infrastructure.

Unlike the banks, the credit union movement has not withdrawn from rural areas or from poorer urban areas. No less than 35 per cent of the €5.6 billion that credit unions currently have out on loan, was given out in loans of less than €700. These are the sort of loans that the banks have little interest in and, should the credit unions withdraw from this market, the customers concerned would have no one to turn to apart from money lenders.

There are 438 registered credit unions in the State and they have combined assets of €10 billion. As well as loans of €5.6 billion, they have a combined investment portfolio of €4.5 billion.

With 2.4 million members in every corner of Irish life, the credit union movement is a key financial institution. The question at the moment is whether the regulation being introduced for credit unions will alter the service that credit unions offer.

The regulator, Mr Brendan Logue, says no.

Mr Liam O'Dwyer, the chief executive of the Irish League of Credit Unions (ILCU), to which most credit unions are affiliated, says the experience of other countries leaves real cause for concern.

The league lobbied against the regulation of credit unions coming under the umbrella of the Irish Financial Services Regulatory Authority (IFSRA), but to no avail.

Last September, IFSRA appointed Mr Logue as regulator of the credit unions. He moved to his new job from the financial services division of IDA Ireland, where he had spent 15 years promoting the International Financial Services Centre.

It is the kind of background that makes some members of the credit union movement nervous.

Mr Liam O'Reilly, chief executive of IFSRA, tried to reassure the movement, at the time of Mr Logue's appointment, by saying it fully recognised the importance of its ethos.

It is in part in order to address the suspicion that might exist among credit union members that Mr Logue has spent the past while "on the road" meeting members around the State. (On Monday night, he and two deputies found themselves surrounded by angry depositors at Gurranabraher.)

The last of the meetings took place this week and a summary of the regulator's views is likely to be published in the near future.

As an indication of IFSRA's commitment to the movement, Mr O'Reilly joined Mr Logue for the meetings.

The league has complained about the €1.4 million annual levy that is to be raised to pay for Mr Logue's office, arguing that it threatens the movement's ability to issue small loans.

The argument does not seem to hold. The amount is double what used to be levied by the former regulator, the Registrar of Friendly Societies, which everyone agrees was under-resourced. It equals 0.02 per cent of the asset value of each credit union levied, and is only one-third the size of the levy imposed by the league on its members.

The regulator wants to introduce an obligation to file quarterly returns of financial information on credit unions, with the returns to be accompanied by questionnaires to do with governance issues. The annual returns currently filed are complex and of little regulatory use given their essentially historical nature.

The ILCU, for its part, says it is already receiving quarterly financial information from its members, and that it is concerned about duplication.

It says that, in other jurisdictions, the regulator has worked with a monitoring body, with the monitoring body often being the equivalent of the league. The suggestion is that the league's monitoring role should be absorbed under the regulator's wing.

Mr O'Dwyer says the ILCU's concern is that a "heavy administrative burden" associated with customer credit checking and the filling in of various forms could have a negative affect on the ability of smaller, volunteer-operated credit unions to issue small loans to people who are in difficult circumstances.

"We are very supportive of IFSRA but we are concerned that people who are expert in banking are making regulations for a community-led, community-manned and community-run credit union movement."

He is concerned that "totally inappropriate" regulations might be foisted on the movement.

Mr Logue says his objective is to put in place an "early warning system" that will bring to his attention developing problems before they grow to crisis level.

"If some people are asking why we need a new regulatory system, then the answer is there, staring them in the face."

Early intervention saves money, is his message.

His hope is that his tour will have allayed some of the concerns and "misconceptions" which he accepts are abroad about his office. He also says that, in a minority of credit unions, there are "cliques" which resent new people or new levels of control being introduced.

Apart from regulation, there are other challenges facing the movement - what to do with all the money that's coming in; how to attract more young people into the movement; and the thorny issue of introducing an IT platform.

The credit union movement has grown hugely in recent years. Since 1990, the asset value has increased elevenfold.

Since the act that governs the movement was introduced in 1997, the asset value has doubled. Member numbers are increasing steadily, even in Gurranabraher.

Credit unions are attracting a lot of mobile savings because they can offer a better interest rate than the banks.

They have so much money now that the philosophy of re-investing money in the immediate community is difficult to implement. A lot more money than used to be the case is being passed into the hands of asset managers.

Also the issue is creating an imbalance on the balance sheet, in that the amount of money on deposit that could be withdrawn quickly - should bank interest rates suddenly rise - is a constant threat to the stability of credit unions.

The regulator is likely to recommend a change to the Act so that the restriction on the number of longer term (five to 10 years and more) loans that can be issued will be eased. This will allow more money go back into the community but further increases the danger from the potential balance sheet imbalance.

A specialist mortgage bank is a feasible way of addressing the issue, but one which would need careful planning.

"Property loans have been the graveyard of many financial institutions," says Mr Logue.

It is obvious to anyone involved in the movement that there is a disproportionate number of directors who are aged 50-plus. Young people don't seem to be attracted to the movement, although Mr Logue believes more could be done to change the movement's image.

The aborted attempt to introduce an IT platform for ILCU members some years ago ended up being a €34 million fiasco.

It caused a huge crisis but the league is now returning to the fray.

A number of projects are currently at pilot stage and the league is confident the mistakes of the past will not be repeated.

A more electronic credit union movement might be more attractive to young people, Mr O'Dwyer observes.

There are other issues too. The Competition Authority is attacking aspects of the league's rules as being anti-competitive, and the matter is due to be heard in the High Court before the summer recess.

The Credit Union Development Association, a splinter group from the ILCU, has close to 20 members now but, because of their size, it has almost 20 per cent of the asset value of credit unions nationally.

The changes through which the credit union movement is going will continue to occur mostly under the public gaze. Watch out for flying bottles!