Roscommon meeting told of potential closures
A meeting held in Roscommon recently was told that some credit unions around the country are in danger of closing if the Central Bank presses ahead with plans to increase the Industry Funding Levy on credit unions from approximately €1.5 million per annum to approx. €7.8 million by the end of 2022.
Roscommon Credit Union Limited, along with 248 other credit unions around the country, are now mounting a political campaign to “strongly oppose” an increase which would see credit unions pay up to 400pc more to fund the Central Bank.
A meeting was held recently in the Roscommon Credit Union main office, with invited guests including ILCU President and Roscommon Credit Union Director Gerry Thompson, local credit union representatives from Castlerea, Lanesboro/Ballyleague, Boyle, Ballinasloe and Athenry, and the local TDs and Senators.
In a statement, Roscommon Credit Union said that the proposed increase is “imposed” with the consent of the Minister of Finance, Paschal Donohoe and “without consultation” with credit unions.
“Credit Unions currently pay 9% of regulatory costs linked to their operations. The Central Bank wants this to rise to 50% of regulatory costs by 2022. This would see the costs for a small-sized credit union such as Roscommon Credit Union Limited go from €3,514 last year to €17,570 in three years’ time, a significant rise by any measure.
“This levy is in addition to several substantial annual levies credit unions already pay to the Central Bank. The Industry Funding Levy equates to €1.5 million per year, with €7.5m a year to fund the Credit Institute Resolution Fund Levy, another €2.5m as part of the Stabilisation Scheme Levy, and €12.2m a year as part of the Deposit Guarantee Scheme.
“There are also other smaller levies, such as the Financial Services Ombudsman Levy and the Data Protection Commissioner Levy. Taken together, the levies mentioned above cost credit unions approximately €24 million per annum, and this is a considerable burden for a credit union”.
The Roscommon Credit Union statement added that credit unions are not simply an alternative to banks but are a model of community banking with deep roots and widespread affinity.
Irish League of Credit Unions (ILCU) chief executive Ed Farrell has written to Finance Minister Paschal Donohoe questioning why he granted approval to the Central Bank for the increase. Locally, Roscommon Credit Union Limited has taken positive steps to lobby local politicians (government and opposition) to prevent what they call “this unfair and totally disproportionate increase” being imposed by the Central Bank.
Gerry Thompson, ILCU President and Director of Roscommon Credit Union Ltd. spoke of the counter-intuitive nature of what he called this “astronomical” hike: “Raising the levy is effectively a tax on social capital. It is a levy on volunteers and the local community, one that is unsustainable and goes against everything the credit union movement is trying to achieve for its members.
“Our hope is that this meeting will be the first of many credit union meetings across Ireland garnering support from local politicians and Government representatives, empowering them to take a stand for credit unions and the communities they represent and serve”.
Bernie Moran, Manager of Roscommon Credit Union, said: “We would ask members when speaking to their local political representatives to please reinforce the message of the importance of your local credit union and the flexibility it affords to you. The payment of these levies is taken from the surplus income of all credit unions which should be going back into member services expansions and allow the credit union to offer all the free services to its members that it currently affords”.