New Regulatory Authority For Irish Credit Unions Launched

DUBLIN, Ireland – There’s a new regulator in town for Irish credit unions and its name is the Irish Financial Services Regulatory Authority (IFSRA). The Irish League of Credit Unions is guardedly optimistic about how heavy-handed the IFSRA will be, but IFSRA officials say they are not in favor of excessive and unnecessary regulations. IFSRA was officially launched May 1. It combines the responsibilities that formally fell under the Central Bank, the Department of Trade and Employment, the Department of Enterprise, Office of the Director of Consumer Affairs and the Registrar of Friendly Societies. Credit unions were considered a Friendly Society. It will be responsible for over 4,000 organizations and will be a new fighting force for consumer protection. It is currently staffed with 275 people, but expects to have a total employment of 350 by the end of 2004. Neil Whoriskey, IFSRA press officer, talked with Credit Union Times about some of the plans of the new regulatory authority in relation to credit unions. “If it ain’t broke, don’t fix it,” he said. He went on to explain that IFSRA was well aware of the special nature of credit unions as co-operatives with a strong volunteer base and a recognized place within the community. What the IFSRA wants to do is to make sure that the credit unions continue to be a safe place for Irish citizens to do business. He does not see the need for excessive regulation of credit unions, however an ombudsman position will be in place later this year to handle consumer complaints, not just for credit unions, but for all the financial institutions covered by the new authority. The ombudsman will handle the complaints themselves and will operate independently of the IFSRA unless there has been a breach of either the law or regulation in which case the IFSRA will step in. Whoriskey could not state all that is planned for credit unions. A Registrar of Credit Unions will be hired in the near future specifically to deal with credit unions, and that person will have their own agenda but within the guidelines of the consumer-protection brief of the new authority. The post is considered a high-level management position, he said. IFSRA wants to make sure that consumers have all the information they need to make informed decisions about whatever financial services they agree to use. Whoriskey said IFSRA did have the right to inspect credit unions as needed, but a routine inspection schedule or format had not been established be the few-days old authority. Inspections are generally carried out under Section 90 of the Credit Union Act, 1997. Inspections may also be carried out under Section 92 of the Credit Union Act, 1997. This act is still in practice despite the change of regulatory authorities and no major changes in the act are foreseen at this time. At the launch ceremonies, Tnaiste (legislator) Mary Harney said that, “Our new financial regulator is now up and running. The consumer is at the heart of financial regulation for the first time: in law, in organization, in resources,” she said. “In setting up the new regulator, we have taken the view that the public interest and the consumer interest are ultimately at one.” The Minister for Finance, Charlie McCreevy said, “Ireland needs good regulation of the financial sector both from the prudential point of view and also at the point where the individual consumer interacts with the financial system.” Liam O’Reilly, who will head the new unit, set the level of expectations when he said, “I have high ambitions for IFSRA. I want this authority to represent the highest standards of regulation in relation to each part of the financial services industry that we regulate. That is a particular challenge at a time when the regulation of insurance is changing so rapidly and when the industry itself is changing so rapidly. But it is a challenge IFSRA will take up.” Credit unions do offer various insurances to their members. John Murray, media consultant for the Irish League of Credit Unions (ILCU) was cautiously optimistic about the new authority. He said that ILCU “welcomes the establishment of the authority and would hope to enjoy a very positive working relationship with it and that the League is quite happy to see regulation applied across the board.” He mentioned that ILCU had already worked with the legislators to safeguard the traditions that makes the credit union movement special in the creation of the IFSRA. He also echoed some of the things that Whoriskey said in that he hoped the new authority “doesn’t suffocate credit unions with too much with red tape.” Murray left little doubt that ILCU will work with the authority for the betterment of the credit union movement. Credit unions were not plagued with the scandals that hit many other financial service providers in Ireland and which have encouraged the rise of both national and European regulations being tightened to protect consumers. There are over 530 credit unions in both Northern Ireland and the Republic of Ireland. They represent 2.6 million members, _8 billion ($US9 billion) in shares and _5 (US$5.66 billion) billion in loans. Credit unions were unknown in Ireland until the 1960s when they became a major social and financial force in the country. -