Reading CU Focus now equates to one hour of your annual CPD requirements
The magazine of the Irish League of Credit Unions – Autumn 2010
SGM set for
O'Reilly Hall,
UCD
Prepaid Cards
in Northern
Ireland
Launch of Credit Union Poster Competition
Launch of
New
Credit Union
Website
Surge in
Global CU
Savings &
Loans
Contents
Editorial
04
Stabilisation
06
CUs and the Internet
09
Prepaid Cards in NI
12
Social Media
14
Absence Management
17
EU Microfinance
18
Credit Union Profile – Focus on Bishopstown CU
20
Small CUs in the US– Top Challenges
22
ILCU Foundation Update
24
ICT Strategy Update
26
Continuing Professional Development
28
Budget Help @ Duleek CU
30
Kick Starting the Economy
33
CU Advice Corner
34
Your Stories
38
Legislative Update ROI
39
Legislative Update NI
40
Economic Commentary
42
WOCCU Statistical Survey
Main cover photo:
Pictured with Rob Ross, RTE
children’s TV Presenenter at
the Launch of the 27th
annual All Ireland Credit
Union Poster Competition
were Aisling Timmons (15),
Kate Kavanagh (8), Sarah
Minto (7), Adam Minto (5),
Niamh Curry (6) and Ellen
Coleman (4).
SAFE, STRONG, SECURE - that is the message from credit
unions unlike other financial institutions. According to Professor
Patrick Honohan, a building society located in Ireland may
require a bail out in excess of 3 billion euro and one of the main
banks may require up to 24 billion euro of taxpayers assistance.
The Governor of the Central Bank is not optimistic that reforms
can prevent future bank collapses. Also the banking sector is
forecasting a loss of 10,000 jobs by the end of 2010. All of this
has a profound effect on society, the loss of jobs, business slow
down and much negativity is a cause for concern.
The credit union movement must remain positive and above
all prudent by astute management, curtailment of costs and by
all working together in the true co-operative spirit. We are only
too aware of the challenges facing credit unions, be it from
changes in regulation or from the unfortunate situations that
many credit union members find themselves in, mostly through
no fault of their own. Borrowers in credit unions must be
advised to contact their credit unions at the first sign of a
change in their financial situation to prevent arrears developing.
Seeking help early is the key.
Credit Union Regulatory Forum
The Registrar of Credit Unions is inviting representatives from
credit unions in the Republic of Ireland to join him at the
inaugural Forum which is to be held this autumn. The aim of
the forum is to create a formal framework for regular direct
communication between credit unions and the Regulator. The
agenda for this new venture will include the Strategic Review,
the 2010 year-end process and a new approach to regulatory
engagement. The invitation to the forum is primarily extended to
officers in credit unions i.e Chairman, Treasurer, Secretary,
Chairman of the Supervisory Committee and where relevant
Manager. Representatives of the Irish League of Credit Unions
have not been included.
Strategic Review
The formal announcement by the Central Bank and Financial
Regulator on the 27th July of an independent strategic review of
the credit union sector in Ireland came as no surprise to those
within the credit union movement. The review was announced
over 12 months ago and indeed the Irish League of Credit
Unions has sought this review of the sector for some time now.
While much of the focus since the announcement has been
on the financial performance of credit unions, the review is an
opportunity to strengthen the credit union movement by
identifying the key role played by credit unions in society and
underpinning that role by reflecting on the support
mechanisms, governance, operation and indeed the overall
regulatory and legislative framework for credit unions.
Bye for now - CU again.
Editorial Committee: Michael Dowd, Kevin Helferty, Nick Cashin. Volume 2, Issue 3 ©.
ILCU ISSN 1649-377X. League Board: Mark Bailey President. Jimmy Johnstone Vice President. Rosemary O’Doherty Treasurer. Nick Cashin, Michael Dowd, Gerald du Bois, Pat Fay, John Long, Noel Madden,
Brian McCrory, Gerry McGee, John Mullen, Con O’Brien Supervisory Committee: Fintan Boggan, David Florida-James, Jim O’Connell Life Director: John Hume Senior Management Staff: Kieron Brennan CEO.
Fiona Cullen Head of Legal and Secretariat. Tom Kiely Head of Monitoring. Brian Mulholland Head of Insurance Services. Ed Farrell Head of Finance. Mandy Johnston Head of Communications, Marketing and
PR. Charles McLaughlin Head of IT.
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Published By Irish League of Credit Unions 33 – 41 Lower Mount Street Dublin 2 Tel: 353 (0)1 614 6700 Fax: 353 (0)1 614 6701 Email: [email protected] Website: www.creditunion.ie
CU FOCUS AUTUMN 2010 :: 3
Stabilisation
Support
Background
On 23 June 2010, a consultation
paper entitled Stabilisation Support
for Credit Unions (‘CP 44’) was
published by the Central Bank and
Financial Services Authority of
Ireland which invites the views of
parties with an interest in the topic.
Process of Consultation
Following the publication of CP 44,
the League initiated an extensive
process of consultation on the matter
which included:
• Discussion at League Board and
Administration Committee level
(being the sub-committee of the
League Board which administers
the League’s Savings Protection
Scheme (‘the SPS’);
• The convening of eight roadshows
nationwide during July 2010 at
which the views of attendees were
expressed and recorded; and
• A League Special General Meeting
has been convened for 18
September 2010 in order to
discuss a motion on the issue.
The League’s submission on CP 44
(which is required to be made on or
before 24 September 2010) will be
informed by the views which have
been expressed during the above
referenced process of consultation.
04 :: CU FOCUS AUTUMN 2010
CP 44 – Specific Models/Options for
Consultation
The consultation paper seeks views
and comments from credit union
sector stakeholders on six
stabilisation models. Interested parties
are invited to indicate the preferred
stabilisation option(s) for the credit
union sector and the reasons why (or
to rank options in order of preference
where appropriate). The six options are
as follows:
1. Statutory Stabilisation Scheme
under Central Bank Control
2. Statutory Stabilisation Scheme with
the Executive Appointed by Central
Bank
3. Non Statutory - Single Voluntary
Stabilisation Scheme
4. Non Statutory - Multiple Voluntary
Stabilisation Schemes
5. Non Statutory – Maintain SPS in its
Current Form
6. Wind Up and Transfer the SPS
CP 44 - Specific Question
In addition, the consultation paper
seeks views on the following questions:
1. Should there be stabilisation
arrangements in place for the credit
union sector?
2. Should stabilisation arrangements
be on a statutory or voluntary basis?
3. Should there be one stabilisation
scheme for all credit unions or
multiple schemes?
4. What should happen to the existing
SPS fund?
5. How should the ethos of the credit
union movement be protected under
any arrangements?
These questions and proposed responses
to same were discussed as part of the
League’s July 2010 stabilisation
roadshows.
Negotiating Appropriate Stabilisation
Arrangements for Credit Unions
The League Board has proposed a
motion for the consideration of League
Special General Meeting September
2010 which, if passed, would have the
effect of instructing the League Board to
engage in negotiations with the relevant
authorities to achieve a stabilisation
support scheme for credit unions based
on the following parameters:
That the current SPS will evolve to
become a Scheme under a new Credit
Union Stabilisation Company:
1. which will operate in accordance with
the self help and co-operative ethos of
the credit union movement;
2. with the board of directors comprising
as many representatives of the credit
union movement as may be agreed in
negotiations;
3. which adheres to as many of the
principles* as may be agreed in
negotiations;
4. with membership open to all credit
unions in the Republic of Ireland and
Northern Ireland subject to their ability
and commitment to comply with the
requirements of the Scheme;
5. with legislative and regulatory
approval in both jurisdictions;
6. with periodic reviews of the adequacy
of the stabilisation fund within the
Scheme to be conducted, as
appropriate; and
7. memoranda of understanding to be
agreed with the credit union
Regulators in the Republic of Ireland
and Northern Ireland under a
number of headings, to include:
a. management and administration
of the Scheme;
b. probity and competence of
directors and management of the
Scheme;
c. conditions and procedures on
provision of assistance from the
Scheme;
d. access to ensure that the Scheme
is open to all credit unions subject
to their ability and commitment to
comply with the requirements of
the Scheme;
e. contributions to the Scheme by
credit unions;
reporting to the credit union
Regulators in the Republic of
Ireland and Northern Ireland.
* Credit Union Stabilisation Principles
A Credit Union Stabilisation Scheme for
the Irish movement should:
• Be complementary to deposit
protection.
• Depend on effective and enforced
regulation and compliance with
compulsory financial and operational
standards.
• Demand robust monitoring,
supervision and examination of credit
unions by the administrative authority.
• Have power to intervene when credit
unions fail to meet required financial
and operational performance targets.
• Be financed by the credit union
movement.
• Provide technical and/or financial
assistance which is time limited.
• Depend on a strategic and monitored
plan of action to re-stabilise credit
unions.
f. procedures for auditing the
accounts of the Scheme; and
• Include actions to amalgamate/wind
up credit unions which cannot
achieve independent viability.
g. arrangements for periodic
• Be open to all credit unions in the
Republic of Ireland and Northern
Ireland subject to their ability and
commitment to comply with the
requirements of the Scheme.
• Be constituted so as to allow the
accounts of the Scheme to be
consolidated within the accounts of the
Irish League of Credit Unions.
The League Board’s motion was
circulated to member credit unions on 30
July 2010 along with an invitation to
every member credit union to submit
amendments to same on or before 02
September 2010.
Conclusion
We feel that the seriousness of this topic
for member credit unions into the future
can and should not be underestimated.
That being so, we look forward to a full
debate of the subject, the related motion
and any amendments thereto at the
upcoming SGM which will convene on 18
September 2010.
Following the SGM, the League Board
intends to engage constructively with the
Central Bank & Financial Services
Authority of Ireland and to advocate, on
behalf of member credit unions, for the
views which have been expressed during
our consultation process.
Any comment you may wish to make
on the issue of stabilisation support for
credit unions or any queries you may
have on the matter should be directed to
the Head of Legal & Secretariat at
[email protected] or (00 353 1)
6146950.
CU FOCUS AUTUMN 2010 :: 05
Usage of Internet based
Technology by Irish Credit Unions
Donal McKillop (([email protected]) is Professor of Financial Services at Queen’s
University Belfast. Barry Quinn ([email protected]) is a researcher at Queen’s
University Belfast focusing on issues pertaining to credit unions.
Introduction
Technological change has impacted heavily on the
structure, operations and economics of the financial
services industry. Information technology (IT) alters the
ways in which customers access services, mainly through
automated distribution channels such as the internet,
phone-based and other banking access channels. IT can
also yield cost savings associated with the management
of information (collection, storage, processing and
transmission), and by substituting paper-based and
labour-intensive procedures with automated processes.
Consumer uptake of IT innovation in
financial services is of course
dependent upon the IT sophistication
of the customer base as well as their
access to technology. In Ireland the
IT infrastructure has been steadily
improving. In 2004, the Irish
Government sponsored infrastructure
project Fibre Optic Metropolitan Area
Networks was introduced aimed at
permitting open access to private
enterprise of ‘always on’ broadband.
Phase I of this project saw the
installation of fibre optic networks in
27 provincial towns with Phase II
planned to add a further 66 towns1.
That said a recent OECD survey
suggests that Ireland still lags behind
the OECD average for broadband
subscribers per capita.
Against the background of an
increasingly conducive environment
within which to offer IT based
products and services we now present
summary findings from two surveys
designed to gauge the level of such
provision by Irish credit unions.
Internet Technology Adoption
As a start point we constructed three
categories of internet technology
adoption. These categories were
dependent on the existence and
capabilities of credit union websites.
At the first (lowest) level, an
informational website displays general
information on interest rates, and
contract details. At the second
(intermediate) level, an interactive
06 :: CU FOCUS AUTUMN 2010
COMMON BOND
LOCATION
SIZE
Occupational
Community
Urban
Rural
Small
Medium
Large
No Website
17
166
70
113
99
72
12
Informational
8
86
51
43
14
51
29
Interactive
3
17
12
8
4
10
6
Transactional
16
82
68
30
7
33
58
Total Websites
27
185
131
81
25
94
93
61.36%
52.71%
65.17%
41.75%
20.16%
56.63%
88.57%
adopted
Adoption Rate3
Table 1: Credit Union Characteristics as Influences on Website Adoption
website allows members to request
information on share and loan
balances, and to request statements.
It also accepts applications for
membership, loans or share
accounts. Finally, at the third
(highest) level, a transactional
website also allows members to
complete transactions such as
paying bills, make loan payments or
deposits, and transfer funds between
accounts.
In 2008 and again in 2009 we
accessed all credit union websites in
Ireland and assessed their
functionality in terms of the three
aforementioned categorisations. In
addition, we sourced data on the
history of the web sites from the
Internet Archive2. Of the 419 credit
unions in our sample, 185 do not
have a web presence; there are a
further 19 with web sites under
construction; while 213 having a live
web site of varying degrees of
sophistication.
In Table 1 we profile the web-based
functionality of Irish credit unions, as
of September 2009, by common
bond type, in terms of credit union
location and by credit union size
(small credit unions – assets less
than €10m; medium credit unions assets between €10m and €40m;
and large credit unions – assets
greater than €40m).
From Table 1 we see that
occupational credit unions have a
higher adoption rate than their
community counterparts. They also
have a higher proportion of the more
sophisticated transactional websites.
This may be explained by the fact
that the fixed set up costs of a new IT
innovation, such as internet banking,
could be partly subsidized by the
sponsoring organisation, be it
employer or association. An adoption
rate of 65% by urban credit unions
out strips the 42% adoption rate of
their rural counterparts with urban
credit unions also having a much
higher proportion of the more
sophisticated transactional websites.
In part this is because urban credit
unions are on average much larger
and hence may both be better able
to meet the costs of such service
provision and have in place the
requisite customer base to justify
such investment. In addition, it must
be remembered that the Fibre Optic
Metropolitan Area Networks confers
a competitive edge on many urban
credit unions. From Table 1 we also
note that the overall adoption rate of
web-based facilitation for members
increases with credit union size.
Furthermore, larger credit unions
have a greater proportion of
transactional websites suggesting
that as a credit union grows it also
expands the range of services on
offer to members by way of IT.
Products and Services Provided
In this short piece we do not report
the full range of IT services offered
by credit unions rather we now take
the opportunity to highlight some
general trends between 2008 and
2009. First, there is a general
increase in the number of services
offered between the two years, which
can be largely attributed to an
increase of one third in live websites.
Second, we note a substantive
increase in the number of credit
unions providing electronic monetary
traffic, in the form of salary deduction
(51 to 76 between ’08 and ’09) and
Electronic Fund Transfers (84 to 108
between ’08 and ’09). Third, there
has been a pronounced increase in
online account access (104 to 131
between ’08 and ’09) and online loan
application (99 to 109 between ’08
and ’09). Fourth, other financial
technologies such as phone banking
and ATMs have yet to make a
significant impact in the Irish credit
union industry, both having adoption
rates of less than 10%. This may be
indicative of no universal IT network
within the Industry on which such
technologies could be more easily
implemented
Pace of Internet Adoption
In Figure 1 we map out diffusion
trends for internet technology adoption
by Irish credit unions. From 1998 to
2009, we plot the number of credit
unions with registered websites, the
number with live websites, the number
with either interactive or transactional
websites (jointly categorized in Figure
1 as non-informational) and the asset
size of the average credit union.
Figure 1 shows that 21% of Irish
credit unions had registered a
proprietary web site in 2002 with this
rising to 56% in 2009. However, in
2002 only 14% had a live presence
CU FOCUS AUTUMN 2010 :: 07
Figure 1: The diffusion of Web site and Average Credit Union
increasing to 54% in 2009. In 2002,
8% of credit unions had a web site
which was non-informational with
this rising to 36% in 2009. From
Figure 1, we also note that the
growth in technology adoption goes
hand-in-hand with the growth in
average credit union size. This can
have one of two implications, either
that technology adoption fosters
asset growth or that a requisite asset
size is required before a credit union
is in a position to invest in IT.
08 :: CU FOCUS AUTUMN 2010
Research on the credit union
movements in the US and Australia
suggests that it is size which drives
substantive IT adoption.
Concluding Comments
The above results are a snapshot at
two recent points in time and
consequently do not do justice to the
journey that individual credit unions
have made in achieving their current
level of IT sophistication. It is of
course the case that the IT
sophistication of Irish credit unions
lags that of many other movements.
For example in the US IT adoption by
credit unions is now very much on a
par with that of other financial
institutions, and technology (and
deregulation) has succeeded in
blurring the difference between other
retail financial institutions and credit
unions. Furthermore, IT in product
provision has enhanced the
effectiveness of US credit unions as
financial service providers. Technology
is of course expensive and individual
credit unions simply do not have the
scale to effectively and efficiently
exploit technological advances on their
own. Therefore we feel that the future
for Irish credit unions is the creation of
a movement wide integrated IT
solution for the provision of financial
services and products to members.
1. Since July 2009, Area Networks in Tralee,
Killarney, Castleisland, Listowel, Navan,
Bundoran, Ballyshannon, Blarney and the
combined Carrigaline/Ringaskiddy /Passage West
network have been activated.
2. The Internet Archive is a non-profit research
focused organization that was founded to build an
internet library which includes a database of
archived web pages.
3. Adoption Rate equals number of credit unions
of this characteristic with a website/ total number
of credit unions with this characteristic expressed
as a percentage.
Credit Union
Prepaid Card in
Northern Ireland
Are your members looking for a new tool to make budgeting
easier – and these days, who isn't – or looking to wean themselves
off credit cards, and want to deal with a financial institution they
can trust? Then the Credit Union Prepaid Card may just fit the bill.
In the midst of economic uncertainty, it’s
more important than ever to have a handle
on your finances, and in credit union
terms, to provide your members with the
best tools to get to grips with what they’re
spending, and more importantly, how
much they can afford to spend.
More and more consumers have been
opting for debit or prepaid cards - such as
the Credit Union Prepaid Card - giving
them all of the benefits, without the hefty
monthly bills, or interest that credit cards
can bring. For those people who already
have a debit card, prepaid cards offer even
more control over spending and
budgeting, as there’s no facility to borrow,
or ‘accidentally’ go into overdraft.
Those without a bank account use
prepaid cards because in many cases,
they don't have a credit record which may
be needed in order to be approved for a
credit or debit card. Prepaid cards are
convenient for large purchases too, which
is ideal for someone who can't get, or
doesn't want, a credit card. All the
member needs to do is to load or top up
money to the card at their local credit
union and use it anywhere that accepts
Mastercard cards worldwide. The service
adds to and compliments existing services
offered by credit unions.
The credit union prepaid card is a
general purpose reloadable card. It serves
as a budgeting tool for those looking to
manage spending, and as a mobile bank
account for those just needing a card-
based way to spend. The card is a
convenient way to pay, safer than cash,
and can be used at home or abroad. Only
funds loaded to the card may be spent.
Current Status
The Credit Union Prepaid Card service is
already operating in two credit unions,
Newington Credit Union Ltd in Belfast,
who piloted the scheme, and
Ballinascreen Credit Union Ltd in
Draperstown, who have just launched the
service. Plans are in place for others to
begin offering the service to their
members over the coming months. The
service is operated by DCR Strategies
acting on behalf of Newcastle Building
Society.
CU FOCUS AUTUMN 2010 :: 09
obtain a card
• Students can have access to loaded
funds when away from home or
abroad
• Members can only spend what is
loaded to their card. This helps
members manage a budget better
• Safer than cash
• 24/7 access to balance and
transaction information via helpdesk
or online. Members can also check
spending against budget
• There is a certain status associated
with holding a payment card for youth
members as well as the convenience
and payment options a card delivers
There are significant benefits for unbanked members
• All members over 16 are eligible for
a Credit Union Prepaid Card, to give
them access to electronic payments.
This includes:
– Members with a poor credit history
– Members with no credit history
– Members who are paid
weekly/irregularly
• Un-banked members will have the
ability to purchase goods online, by
phone and at the till, without fear of
getting into debt.
• Added security of not carrying cash,
but still having access to your money
Benefits
The Credit Union Prepaid Card will
increase the credit union’s local
profile, member loyalty, and business
with the credit union. The service
adds significant value to the credit
union proposition to members and
will strongly support loan promotions
and growth, for example
Holiday Loans
• Loans can be loaded to members
cards
10 :: CU FOCUS AUTUMN 2010
• Reduces cheques/cash
requirements at the credit union
• Avoids need for members to go to a
bank to lodge a cheque or wait
until cheque is cleared
• Card can be used abroad to make
purchases
• Daily Mastercard currency
exchange rates apply -no
commission
Student Loans & Youth
• All members over 16 are eligible to
Features
Credit unions do not need any
additional IT equipment or software to
offer the Credit Union Prepaid Card
service as it is delivered through an
Internet based card management
system custom built for credit unions.
Broadband and online business
banking at the credit union is required
to deliver the service. Other important
features include
• Funds loaded are available for
spending immediately, no 3-day
clearing funds delay
• 24 hour Helpdesk to report
Lost/Stolen cards and query account
balance/transactions
• Cardholder services are available via
www.creditunionni.co.uk and the
websites of credit unions offering the
service
• Cards are personalised with each
members name
• Cards have Chip & PIN security
requiring a secret PIN entry to make
withdrawals. If a member’s card is
lost or stolen it can be blocked
immediately
• The Credit union Prepaid Card is a
re-loadable prepaid debit card, and
may be topped up and used over
Cardholders Fees
DESCRIPTION
SUMMARY
Card Issue Fee
Card order - £6.25
Limits
The maximum available balance shall not exceed £5,000
unless specifically agreed with the member at the time of
application
ATM withdrawal limit at any one time is £200
ATM daily withdrawal limit is £400
Usage
Restrictions
The card cannot be used at an automated fuel
dispenser, for gambling transactions or for any illegal
purposes
Service Fees
£2.50 per quarter
(This fee covers charges billed to the credit union by the
card issuer for transactions and maintenance of the
service, and will be billed on the first working day of each
quarter)
Transaction Fees
Card Load - Nil
Transaction charges are built into the quarterly service
charge, including:
• Retail Point of Sale
• Retail Point of Sale with cashback*
• Online (Internet) purchases
• Telephone purchases
*Where cashback is offered by the retailer – UK only
Cash
Withdrawal Fees
ATM Withdrawal (UK) - £0.68
ATM Withdrawal (Outside UK) - £2.50
Surcharge ATM’s will incur a charge as set by the ATM
provider. ATM withdrawal fees are deducted from the
card balance at the time of withdrawal
Balance
Enquiries
Online Statement/Balance Enquiry -Nil
Card Services Support/Enquiries - Nil
Other Fees
Chargeback Fee - (if applicable) £20.00
Paper Statement Request Fee - £10.00
Card Replacement - £5
and over again to make payments at
over 28 million merchants around the
world that accept Mastercard cards.
Costs
Various financial institutions offer
prepaid cards with different features,
different benefits, and a different fee
structure. Some offerings charge a
higher upfront fee, and then have lower
transaction fees. Others are pay-as-yougo. The Credit Union Prepaid Card
provides the best product, and value, for
members. Visit http://www.what-prepaidcard.co.uk to compare the Credit Union
Prepaid Card cardholder costs below
against those of other leading general
pre-paid card offerings in the UK.
In this cost model credit unions pay
for cardholders POS purchase
transactions and get £2.50 per quarter
per cardholder in return. Credit unions
are also required to pre-fund the card
settlement account to allow cardholders
draw on funds loaded immediately.
The ‘Investing in our Future’ research
produced by Amarach Research in
August 2009 highlighted that a large
proportion of the population of the island
agree that they ‘would like to use the
Credit Union for more of my financial
needs’. Credit unions offering this
service can expect to retain and enhance
their relationship with members. This is
a low cost, high value added service
which is affordable even for smaller
credit unions.
Next steps
If you are interested in offering this
service or would like further information,
contact Joe Timmons at the Irish League
of Credit Unions by telephone on +353
(0)1 614 6968 or email
[email protected]
Credit union members should contact
their local credit union for details.
CU FOCUS AUTUMN 2010 :: 11
Social Media
– A Strategy for Credit Unions
Some may believe
that social media
sites such as
Facebook or Bebo
are a passing fad;
others are convinced
that they are here to
stay. However, even
if social media is
only a temporary
phase in our lives, it
is one that is far too
powerful to ignore.
The reality is that
even if certain
applications go
through a phase of
being the “top social
media presence”, the
idea of social media
is here to stay. If it’s
not Twitter or
Facebook, new and
improved tools will
be developed and
the concept of
"social media" will
prevail.
12 :: CU FOCUS AUTUMN 2010
In short, social media is simply a ‘new’ way to
engage with your public. A common
misconception is that it is being used by solely
the younger demographic, when in fact; a
good majority of this audience is 55+. The
truth is that this demographic is made up of
active users who are “looking for” news. Credit
unions can use Facebook to access a large
audience. Indeed, almost 1.5 million people in
Ireland have created a Facebook presence.
A different demographic are users of Twitter
or write blogs. These users are primarily
engaged on the web with helping to spread
news. They are heavier internet users, spend a
lot of time seeking and creating content and
require a different message or method to grab
their attention.
What is Social Media?
The best way to define social media is to break
it down. Media is an instrument of
communication, like newspaper or radio, so
social media would be a social instrument of
communication. The
technical definition
is ‘....a media
designed to be
disseminated
through social
interaction,
created using
highly accessible
and scalable publishing techniques’.
In simple terms, this would be a website that
doesn't just give you information, but interacts
with you while giving you that information. This
interaction can be as simple as asking for your
comments or letting you vote on an article, or
it can be as complex as recommending
movies to you based on the ratings of other
people with similar interests.
Think of regular media as a one-way street
where you can read a newspaper or listen to a
report on television, but you have very limited
ability to give your thoughts on the matter.
Social media, on the other hand, is a two-way
street that gives you the ability to
communicate too.
Social media marketing is marketing
through social media sites such as Facebook,
LinkedIn, Twitter, Flickr, and YouTube. Social
media marketing has the ability to interact
much more personally and dynamically than
traditional marketing.
Social media marketing is used to promote
products and services. It can be very effective
if it is used appropriately to boost
brand awareness and
overall visibility
on the
internet. In a
credit union
context, it
can be
used to
Key Facebook Facts and Figures:
■ 50% of Facebook users log on in any
given day
■ 5.5 million status updates are posted
each day
■ 2.5 billion photos are uploaded each
month
■ 1.6 million+ active pages on
Facebook
■ The average user has 130 friends on
the site
■ On average, users spend more than
55 minutes per day on Facebook
■ Over 700,000 Businesses maintain
active pages on Facebook
■ About 70% of Facebook users reside
outside of the United States
■ There are more than 180 mobile
operators in 60 countries deploying
and promoting Facebook mobile
products
■ There are over 500,000 active
applications available on Facebook
■ 3.5 million events are created each
month on Facebook
Facebook Ireland Stats:
from Facebook May 2010
■ Active Users - 1.45m
■ 847k active daily users
■ 83% of users come back to Facebook
every week
■ 73% penetration of the online
population
■ 55 / 45 Male / Female
■ 27% of users are > 35 years of age
■ 35% of users are 25 - 34 years of age
enhance and retain a credit union’s
reputation.
Is Social Media and Social News the Same
Thing?
It is easy to confuse social media with
social news because we often refer to
members of the news as "the media."
Adding to the confusion is the fact that a
social news site is also a social media site
because it falls into that broader category.
What Are Social Media Websites?
Social media is a broad term and covers a
wide variety of websites. The one
common link between such websites is
that the user is able to interact with the
website and also with other visitors.
Here are some examples of social
media websites:
• Social News. (Digg, Twitter, Reddit)
Interact by voting for articles and
commenting on them.
• Social Networking. (Facebook,
LinkedIn) Interact by adding friends,
Pictured at the relaunch of creditunion.ie are Mark Bailey, President and Kieron Brennan,
CEO of the Irish League of Credit Unions
commenting on profiles, joining groups
and having discussions.
• Social Photo and Video Sharing.
(YouTube, Flickr) Interact by sharing
photos or videos and commenting on
user submissions.
• Wikis. (Wikipedia, Wikia) Interact by
adding articles and editing existing
articles.
your website, it is also to promote and
spread ideas among your target
audiences. Credit unions can use social
media marketing to stimulate feelings
and goodwill connected to a specific
event, promotion or website.
These websites are simply examples of
social media websites. Any website that
invites the user to interact with the site
and with other visitors falls into the
definition of social media.
Is it worth spending time on social media
marketing?
Success on the Internet is primarily
based on one thing; the visibility of your
website. Increasing the visibility of your
website using social media marketing will
give more exposure and build your
Internet identity more effectively than
just merely advertising your website.
Key Rules to Social Media:
1. Find out where the corporate stance is
on each topic.
2. Know the audience you are responding
to.
3. Get involved and stay engaged – do not
ignore any response.
4. Keep it Real – keep everything factual
and make responses informative.
5. Get to the point – as above keep it
short but ensure the point you are
trying to make is easily understood.
Will social media marketing improve your
search engine ranking?
Absolutely. Social media marketing
increases the accessibility to your
website. Linking to relevant websites or
higher ranked pages will not only bring
more visitors but also improve the quality
of visitors who visit your website. A social
media marketing strategy, when planned
correctly with appropriate resources, will
increase your visibility and exposure on
the internet.
Conclusion:
The potential payoff for credit union social
media participation is enormous. Your
credit union will have a better sense of
how they are perceived by their target
audiences, it will help to establish two way
dialogue with key stakeholders and
empower members to speak with them,
not at them.
The purpose of social media marketing
is not only to draw traffic and attention to
Follow us on
Twitter
Facebook
Just click on the links on
www.creditunion.ie
CU FOCUS AUTUMN 2010 :: 13
unacceptable absence may be used
to make it clear to employees that
unjustified absence will not be
tolerated and the absence policies will
be enforced;
• Ensuring Managers and Supervisors
are trained in the processes involved
in Absence Management and then
involved in the process;
• Providing sickness absence
information to line manager; and
• Involving occupational health
professionals when necessary.
Managing Long-Term Absence
Having a formal strategy in place when
dealing with long-term absence will
assist the credit union in getting
employees back into the workplace after
a prolonged period of sickness or injuryrelated absence. The role of line
managers is important along with the
following intervention strategies:
• Changes to work patterns or
environment
• Return to work interviews
• Occupational health involvement
• Restricting sick pay
• Rehabilitation programmes
Absence management
Managing absence in the workplace is vital, not only for
meeting the business needs of the credit union but also
for staff morale and commitment. Preventative measures
should be looked at in tandem with absence to actively
encourage good attendance with positive measures, to
promote employee wellbeing and the provision of suitable
working arrangements.
Average sickness absence in non profit
organisations is currently costing €836
(£698) per employee per year and
employee absence costs employers 9.4
working days for every member of staff
per year1. When considering absence
management, there are a number of
factors which need to be examined,
which include:
• What are the main causes of
absences;
• Information on managing sick leave
effectively; and
• Implications of legislation on managing
absence
Identify Periods of Absence
To understand if your credit union has
an issue with absence, it is necessary to
collect information to identify any
patterns and to measure levels of
absence with the following formula
which details the percentage of total
Total absence (hours or days)
in the period x 100
_________________________
Possible total (hours or days)
in the period
14 :: CU FOCUS AUTUMN 2010
time available which has been lost:
The reasons for uncertified absence
should be recorded for all employees, in
order to adopt an effective strategy to
manage and reduce this type of
absence. An Absence Management
Policy should be developed and
implemented, which should meet the
legislative2 requirement for employers to
provide staff with information on terms
and conditions which relate to incapacity
for work due to sickness or injury,
including the provision for sick pay.
Managing Short-Term Absence
Effective interventions in managing
short-term absence include:
• A proactive absence management
policy;
• Return to work interviews - Return to
work interviews can help identify shortterm absence problems at an early
stage. They also provide managers
with an opportunity to start a dialogue
with staff over underlying issues,
which may be the cause of absence;
• Disciplinary procedures for
unacceptable absence levels - The use
of disciplinary procedures for
There are four main elements in the
recovery and return-to-work process.
These are as follows:
1. Keep in contact with sick employees
– ensure contact is maintained on a
regular basis using a sensitive and
non-intrusive approach.
2. Planning and undertaking workplace
controls or adjustments as some
obstacles may hinder an employee’s
return to work. A risk assessment
can identify measures or adjustments
to help workers return and stay in
work. Examples of these may
include:
- Allowing a gradual return-to-work, e.g.
building up from part-time to full-time
over a period of weeks;
- Changing work patterns or
management style to reduce pressure
and give the employee more control;
3. Using professional advice and
treatment – occupational health
professionals should be able to play a
major role in evaluating the reason
for absence, carrying out health
assessments, and assisting managers
in planning a return to work.
4. Planning and co-ordinating a returnto-work plan. This must be agreed
by the employee and the line
manager and any other staff likely to
be affected. The plan would include:
- The goals, such as modified working
hours, or a modified job role;
- The time period;
CU FOCUS AUTUMN 2010 :: 15
credit union can only send the
employee for an independent medical
with the credit union doctor if this right
is expressed in the contract of
employment and/or the sick leave policy
of the credit union. The independent
medical assessment should be
undertaken by an occupational health
specialist if the credit union doctor is
not suitably qualified for the required
assessment. The credit union doctor or
occupational health specialist should be
provided with any factual information
about the employee’s absence to date
along with relevant information
pertaining to the employees working
conditions and a copy of their job
description. The purpose of this
exercise is to examine if the credit union
should provide any reasonable
adjustments to accommodate the
employee as a result of their medical
condition or possible disability.
- A statement about the new working
arrangements; and
- Review date
Disability Discrimination
When managing long-term absence and
dismissal, it is important to be aware of
disability discrimination claims. If an
employee is dismissed on the basis of
their disability, they could bring a claim
to the Equality Tribunal because they
were treated differently on the basis of
their disability, as this is one of the
protected grounds under Employment
Equality Acts. An employer must not
dismiss an employee on the basis of
their disability3. Employers are obliged
by legislation to make “reasonable
provisions” for employees who become
disabled4 as a result of sickness. The
employer must prove that, following
attempts to reasonably accommodate
the employee, they remained unable to
work and that due to the business needs
of the credit union, the employer had no
option but to dismiss the employee. The
decision to dismiss an employee can
only be made following an up-to-date
medical assessment with an
occupational health specialist and only
after fair procedures have been followed,
i.e. meeting with the employee to
discuss the matter and informing them
that dismissal is being considered and
providing them with an opportunity to
respond.
Frequently Asked Questions
Scenario 1
Employee A has a history of sporadic sick
leave, which is both certified and
uncertified. Management have never
16 :: CU FOCUS AUTUMN 2010
approached the employee to discuss
their absence issue and there are no
absence management procedures in
place. Should the credit union discipline
the employee?
The credit union should implement an
absence management policy and inform
all employees that all sick leave will be
monitored going forward and that return
to work interviews will take place
following any period of absence. The
credit union should document the
absence history of all employees and
conduct meetings to discuss
unacceptable levels of absence and to
examine if any underlying reasons exist
for the absence. Once these steps have
been taken, the use of disciplinary
procedures for unacceptable absence
may be used to make it clear to
employees that unjustified absence will
not be tolerated and the absence
policies will be enforced.
The agreed process should be followed
consistently for all employees, not just
the employee with the absence issue.
Scenario 2
Employee B has a history of certified sick
leave and has informed the credit union
of their medical condition. What should
the credit union do?
The credit union should meet with the
employee to discuss their medical
condition as they have a duty of care for
the health and safety of employees
within the workplace. It may be
necessary to send the employee for an
independent medical assessment to
identify if there are any actions the credit
union must take in accommodating the
employee within the workplace. The
Scenario 3
Employee C is on certified sick leave for
stress for a period of 4 months. An
independent medical assessment has
recommended that the employee attend
counselling sessions and that they are
physically fit to return back to work.
What should the credit union do?
The credit union should organise a
meeting with the employee to discuss
the findings of the independent medical
assessment and possible ways of
reasonably accommodating the
employees return to work. It would be
advisable that the credit union facilitate
the counselling sessions and agree with
the employee arrangements for their
return to work. If the stress is work
related, the employer is obliged to
investigate both the reasons and
suitable interventions strategies to
facilitate the employees return.
Absence Management Procedures and
Sick Pay Policies are available to
download from the ILCU website
www.creditunion.ie
For further information or to discuss any
of the above, please contact the HR
Department.
1 CIPD – Annual Survey Report, Absence
Management, 2009.
2 Employment Rights (Northern Ireland) Order
1996; and Terms of Employment (Information)
Act, 1994 and 2001.
3 The Disability Discrimination Act 1995 (as
amended) for Northern Ireland and the
Employment Equality Acts, 1998-2008 for the
Republic of Ireland.
4 Ibid
EU Microfinance Fund
Earlier this year, details were
announced of a new European loan
scheme/ microfinance fund that is
being launched by the European
Union. The European Progress
Microfinance Facility for Employment
and Social Inclusion (EPMF) as it has
now been named will make €100
million available over a four-year
period across the 27 EU member
states. The facility will be specifically
targeted at newly unemployed people
in need of loans to start their own
businesses. Up to €25,000 will be
made available in the form of loans
and credit guarantees from the
European Union.
The move is designed to help
people who have lost their jobs, those
who wish to start a small business,
and people who have difficulty
securing finance from traditional
banking sources. Micro-enterprises
are defined by the EU as businesses
employing fewer than 10 people and
according to EU data these
enterprises make up around 91% of
all European businesses.
Key points on the Microfinance
Facility
• Objectives: The aim of the Facility is
to increase the access to, and
availability of microfinance to a
sufficient scale and within a
reasonable time-frame. Microcredit
is defined as productive loans (i.e.
loans that generate business and
contribute to growth and
employment) below €25,000.
• Target groups: People who have lost
their jobs (or are at risk of losing
their jobs) and those who are
disadvantaged with regards to
accessing the commercial credit
market are the main target groups
of the Facility. In addition,
entrepreneurs of micro-business
(less than 10 employed people;
annual balance sheet is below €2
million), self-employed and the
social economy should benefit from
the initiative.
• Conditions for accessing the
Facility: The microfinance providers
shall closely cooperate with
organisations engaged in
representing the interests of the
final beneficiaries of microcredit to
ensure that they receive mentoring,
training, etc. The microfinance
providers also have to comply with
responsible lending principles and
seek to prevent over-indebtedness
of the borrower.
• Management of the Facility: The
Facility will be managed jointly by
the European Investment Bank
(EIB) and the European Investment
Fund (EIF).
Main Features of the Micro-Credit Guarantee
Term
Covers defaults which occur within 3
years from the signature of the
guaranteed loan agreement
Guarantee Rate
Up to 75% of Micro-credit
loan/guarantee
Guarantee Fee
Other than a Commitment Fee, if any, no
guarantee fee shall be charged
Commitment Fee
Charged to the Intermediary if the
portfolio does not reach at least 90% of
the Agreed Volume within the
Availability Period
Agreed Volume
Target volume the intermediary shall
attain within the Availability Period
Availability Period
Up to 24 months
• Available budget: €100million (this is
across all 27 EU member states).
Credit Unions and applications to the
Microfinance Fund
The Microfinance fund application
process will be administered by the
European Investment Fund (EIF). The
EIF which is owned by the European
Investment Bank has administered
numerous similar schemes in the past
on behalf of the European
Union/European Investment Bank.
The EIF has informed the Irish League
of Credit Unions (ILCU) that the
precise details of the application
process, contact details for
applications etc. are now available on
their website www.eif.org
The ILCU has held discussions with
the EIF in terms of credit unions
applying to the facility. The EIF have
outlined that the application/selection
process will work as follows:
• Initial call for expressions of interest
and application form published on
the EIF website
• The proposals will be examined by
the EIF in chronological order of
receipt using best business
practices.
• Satisfactory applications will be
followed up with due diligence visits
• Once the due diligence has been
completed the proposals may then
be approved by the EIF Board and
the European Union
• Signature of the agreement between
the EIF and the lending institution
The EIF have made it clear to the ILCU
that due to limited resources they will
only be in a position to conduct one (or
at most two) due diligence processes
for credit unions in Ireland. The EIF
therefore have advised that credit
unions in Ireland that wish to apply to
the facility should do so in a coordinated fashion through their
representative body i.e. ILCU.
Credit unions who wish to discuss
this facility further or who intend to
make an application should contact
John Knox [email protected] in the
Research & Development Department
of the Irish League of Credit Unions.
CU FOCUS AUTUMN 2010 :: 17
Focus on …
Bishopstown Credit
Union Limited
KEY FIGURES:
Membership
Staff (incl. Voluntary &
Part-time staff):
Loans:
Savings:
23,581
38
€58.7m
€115.4m
Bishopstown Credit Union Limited is in
existence for over 40 years but nobody
could accuse them of resting on their
laurels. While members enjoy the same
friendly service they have come to expect
from Bishopstown Credit Union, they also
enjoy membership of an innovative credit
union. They haven’t changed the service –
they have merely improved it. An enhanced
service has ensured that they are offering
twenty-first century service, with a credit
union ethos.
SERVICES PROVIDED
Motivated by the co-operative principle of
people helping people, Bishopstown Credit
Union has looked at the services on offer
and ways to improve them. Following a
survey of members, it was identified that
they wanted their credit union to evolve
with service improvements. The Board and
Management at Bishopstown Credit Union
listened to the members and as a result the
3 main improvements implemented were:
sort code, debit card and online access to
accounts
Members can now receive all types of
payments electronically into their
Bishopstown Credit Union account through
18 :: CU FOCUS AUTUMN 2010
the sort code (99-10-12) and their unique
8-digit LINK account number. From
Children’s Allowance to wages to pensions,
Bishopstown Credit Union is receiving
funds for members, from various
organisations. Members can also make
payments from their account (e.g. rent,
mortgage, utility bills etc.). This is all
facilitated through the sort code and by the
new technology provided by our Canadian
partners.
Although Bishopstown Credit Union is
community-based, it has a global reach
with the DEBIT card which can be used in
over 26 million locations worldwide. This
DEBIT card is an enhanced version of the
previous ATM card and is available to all
adult members. It works online, in-store
and at ATMs, making it the card that meets
all your needs. The Bishopstown Credit
Union debit card is the only free card
available in Ireland that allows people book
flights online with Ryanair, without paying
the booking fee.
The newly revised website
(www.bishopstowncu.ie) allows members
to view their accounts and transfer funds.
This service allows members to keep an
eye on their funds and manage their money.
YOUTH DEVELOPMENT: WHAT’S NEW AT
BISHOPSTOWN CU?
• SOCIAL NETWORKING
Bishopstown Credit Union set up a social
networking presence to communicate with
the CIT and UCC students, as they are
within the common bond. With changing
technology and changing member
requirements comes opportunities and this
has been recognised by Bishopstown
Credit Union and their online presence
through Facebook and Twitter.
• SECOND LEVEL THINK-TANK
Youth are the future of the credit union
movement at large and their requirements
should be looked at. As part of the youth
development focus of Bishopstown Credit
Union, second-level schools in the area
have been contacted for their opinions
and ideas on how they would like to see
their credit union run. The second-level
students believed that credit unions were
focused on the older generations but that
the DEBIT card would change that
perception, in time.
INNOVATION
The impact of Bishopstown’s innovation
has not gone unnoticed by the country at
large. With coverage in local and national
newspapers and radio stations alike, and
also television coverage in the form of RTE
News, Bishopstown Credit Union has
certainly made the headlines recently.
Local recognition came in the form of a
reception which was held by the Lord
Mayor of Cork. However, the best
recognition came from members, who have
made the move and are now seeing the
benefits of the improved services.
This modern approach to existing
services has involved dedication from the
Board of Directors and staff alike. Ray
Kenny, CEO, Bishopstown Credit Union,
explains why they improved their services,
“We improved our offering for our
members. Following a survey of our
members, we discovered they were looking
for a credit union that met their needs and
this was not happening. Members viewed
online access to accounts as a minimum
requirement for any financial institution.
As members wanted improved services, we
moved to develop our existing offering.”
Indeed, the survey conducted by
Bishopstown Credit Union highlighted the
need for the credit union to evolve to meet
the needs of the community and to ensure
that the younger members were
encouraged to join, to assist the continued
existence of the credit union. The
research findings were corroborated
further with the ILCU’s Research Report
entitled ‘Investing in our Future’ which was
published in August 2009. The Research,
conducted by Amarach, stated that 63% of
members in the Republic of Ireland are
interested in a Debit card from their local
credit union and that 50% of members are
interested in online facilities. It is clear
from the recent research that members
and non-members alike would like to use
credit unions for more of their financial
needs and Bishopstown Credit Union has
realised this.
Bishopstown Credit Union spent a
number of years researching the market,
in an effort to find the best improvements
possible. Looking back on the research,
Ray Kenny agrees that it appeared
daunting at the time but that it has been
worth it, “We have received international,
national and local recognition, which is
very encouraging. However, the pinnacle
of these accolades has come through the
members’ praise of the improved services
which allows them the flexibility to utilise
Bishopstown Credit Union to support their
personal finance needs. That proves to us
that, we have taken the right step, for our
members.”
One of the largest community-based
credit unions in Ireland, Bishopstown
Credit Union is looking towards the future
and their future looks bright. Bishopstown
Credit Union’s foundation as a cornerstone
of the community has been reinforced
through this rejuvenation and it is
certainly a credit union worth watching.
CU FOCUS AUTUMN 2010 :: 19
Small CUs in the US:
Top Challenges
Yesterday & Today
Ten years ago, the biggest challenge facing small
credit unions was the need to offer a wider range of
services. Today, that concern isn’t on the radar for
most small credit unions, those with assets of $35
million or less, which make up 70% of the nation’s
8,000 credit unions (half have less than $16 million
in assets).
That was one finding of a 10-year review
conducted by the Credit Union National
Association’s (CUNA) Small Credit Union
Committee.
The economic landscape has changed
dramatically since CUNA published
findings of its Small Credit Union Task
Force in 1999. Today, most small credit
unions offer a wide range of services, and
operating expense ratios vary little across
credit union asset size groups.
According to CUNA’s Small Credit
Union Committee, small credit unions’
overriding challenges now include:
1. Regulatory burden. This is widely
regarded as small credit unions’ No. 1
concern. Today, more than 25% of U.S.
credit unions are operated by three or
fewer full-time equivalent employees, and
more than 1,000 credit unions are
operated by one or fewer full-time
equivalents.
The crush of post-crisis regulatory
initiatives and the constant drumbeat of
changes to existing regulations
significantly hamper credit union
employees’ effectiveness.
While policymakers discuss the
theoretical issue of institutions that are
“too big to fail,” small credit unions worry
that policymakers see them as “too small
to save.”
2. Back-office redundancies and lack of
collaboration. Substantial increases in
operating expense ratios moderated in
2009 as savings inflows dramatically
20 :: CU FOCUS AUTUMN 2010
increased. Nevertheless, small credit
unions recognize that this reversal is likely
to be short-lived.
Small credit union survival hinges on
the ability to spend more time interacting
with members and less time mired in
noncore tasks such as payroll, accounting
system management, and data
processing.
3. Succession planning. This challenge
has less to do with the successionplanning process and more to do with the
increasingly difficult task of finding
qualified people willing to work long hours
for relatively low pay. The difficulty in
finding qualified directors willing to accept
the growing risk of oversight responsibility
magnifies this challenge.
4. Corporate credit union issues. Small
credit unions are apprehensive about their
ability to bear the significant costs
associated with corporate credit union
stabilisation. And they’re concerned about
the National Credit Union Administration’s
willingness to do everything in its power to
avoid permanent depletion of corporate
capital.
What's the solution?
The Committee didn’t find any “silver
bullet” solutions that will magically
address problems small credit unions
face. However, it did identify actions that,
if taken by various levels of the credit
union movement, will help small credit
unions thrive and grow:
1. Share the burden. The responsibility for
assisting smaller credit unions doesn’t rest
with any single element of the movement.
All must be involved.
2. Expand and streamline outsourcing for
economies of scale. One way for small
credit unions to increase efficiency is to
purchase operational services from larger
firms that enjoy economies of scale.
These larger firms could be other credit
unions or vendors. Services that can be
outsourced for greater efficiency include
data processing, credit card processing,
share draft processing, loan centers, call
centers, collections, shared branches,
Web site development and maintenance,
etc.
In addition, system entities should seek
ways to educate, support, and otherwise
help small credit unions establish credit
union service organizations (CUSO).
There’s value in the collaborative services
CUSOs provide, which could be a
significant contributor to future success.
Established CUSOs are likely to expand
through collaboration to provide
compliance officers, audits, and other
services that small credit unions now pay
for on a piecemeal basis without the
power of scale to negotiate pricing.
3. Encourage larger credit unions to assist
small credit unions. Large credit unions
can help small credit unions with
mentoring programmes, donations of
used equipment, fill-in staff for vacations
and training, access to large-volume
purchases, and assistance with marketing
and planning. Local and state-level
organisations should help facilitate such
efforts.
However, large credit unions should be
sensitive to small credit unions’ needs
when offering such assistance. Small
credit unions may be suspicious of such
offers, believing them to be the initial
steps of a merger investigation.
4. Form peer networks. Small credit unions
should routinely meet with local peers and
operate e-mail support groups. Often, the
best source of advice to deal with an issue
is a similar-sized credit union that has
already dealt with the same problem.
5. Exploit group buying opportunities to
reduce per-unit costs.
6. Promote small credit union price
discounts.
7. Produce basic operations, policy, and
compliance manuals for small credit
unions. These could be joint projects of
small credit unions and state and national
organisations, and could be made
available and updated on the Internet.
8. Provide low-cost hardware and software
to small credit unions.
9. Examine shared branching. Explore the
feasibility of small credit unions making
their locations available to each other’s
members for basic counter transactions to
increase accessibility and encourage
membership growth.
10. Preserve charters wherever possible.
When merger is deemed unavoidable,
encourage small credit unions to join
similar institutions to preserve uniqueness
and provide growth opportunities to other
small credit unions.
Why Support Small CUs?
• Political strength and unity. As
not-for-profit, democratically
controlled financial services
cooperatives, credit unions enjoy
a special, legislatively mandated
role. The existence of viable,
healthy small credit unions is
vital to the continued political
strength of the credit union
movement.
• Members like them. There are
nearly 13 million members in
credit unions with assets of less
than $35 million.
• They provide choice. Small
credit unions offer unique
features, including the sense of
belonging to a small, closely
defined group, volunteer
opportunities, and more access
to management and the board.
• Philosophical roots. Many
believe small credit unions
exemplify credit union
philosophy in action.
• They’re the source of all credit
unions. All credit unions started
out small. And more 400 credit
unions that started 2006 as
“small” institutions (less than
$35 million in assets) outgrew
the classification by mid-year
2009.
• Democratic models. Small credit
unions provide opportunities to
volunteer and participate in
democratic governance. There
are more than 55,000 volunteers
in credit unions with less than
$35 million in assets.
• They preserve credit union
charters. It’s difficult to start up a
new credit union, so extreme
care should be taken to preserve
credit unions already in
operation.
• Diversification. Concentrating all
credit union resources in a few
institutions would produce a
system that’s less robust and
able to adjust to a changing
world. Diversification also makes
the credit union movement less
susceptible to financial and
other risks.
Reprinted with kind permission
from Credit Union Magazine
www.creditunionmagazine.com
CU FOCUS AUTUMN 2010 :: 21
ILCU
ILCU
FOUNDATION
FOUNDATION
participated in different youth
organisations. For almost 15 years I
worked in medicine, helping seriously
ill children. In order to do that, I had
to get a second undergraduate
education. I am married with two
daughters, the eldest daughter –
Anastasiya, followed in her father's
steps and is currently working in a
large law firm in St.Petersburg , the
youngest – Daria, received a
scholarship and is currently doing her
Masters in one of the top business
schools in Belgium. Both daughters
are fluent in English, they have helped
me a lot in communicating with Irish
colleagues.
Foundation
Svetlana Amosova – Chairwoman
of the Association of Credit Unions
of Karelia addressing the board of
directors of the Association
The Russian Credit Union Movement
An interview conducted with Svetlana Amosova, Chairperson of the Credit Union
Association of Karelia and Manager of Althea Credit Union, Karelia, Russia.
Russia is a huge country; it is the largest
on earth in terms of surface area
spanning 10 time zones. It is therefore
one of the ILCU International
Development Foundation Limited’s
(ILCUF) most challenging areas in terms
of credit union development. The
inequalities in society are still blatant
and the divide between rich and poor is
increasingly evident.
The ILCUF continues to focus its
effort on strengthening the regional
presence of credit unions. Currently the
ILCUF is supporting the development of
regional associations in the following
22 :: CU FOCUS AUTUMN 2010
three areas of Russia:
• St. Petersburg
• Karelia (North-west region of Russia)
• Dubna (Moscow region).
The ILCUF is assisting these regional
associations to support new and
emerging credit unions with technical
and operational support.
hardship during different wars and
revolutions and during the totalitarian
regime. Losing relatives and friends and
suffering from hunger were all difficult
times for the people of Russia. However,
challenges make a person stronger and
closer to each other, perhaps that is why
Russian people feel that they have an
affinity with Irish people in many ways.
Q. Could you tell us a little about Russia
and its history (comparing it to Ireland).
Russia is a great country with very old
traditions and lots of culture. The
Russian people suffered a lot of
Q. Could you tell us a little about yourself,
your family, hobbies and interests.
I was born in a small city, and I have
always been involved in community work.
After graduating from University, I
Q. What are the key challenges that
Russian credit unions face?
The key challenges lie in the legal
environment. For a long time there was
no adequate law and strict
governmental control, this led to the
establishment of dishonest and badly
run credit unions, and a weakening of
the positive image of credit unions.
Even nowadays, most credit unions
face great challenges: trying to operate
according to the recently passed law
(on credit cooperatives) and
overcoming the effects of the financial
crisis.
Q. Are there any particular products or
services which you would like to see
developed as a priority during your
term?
I would like to develop those products
and services which members need the
most: long-term loans, more diverse
savings programmes, including those
for children, young people, insurance
and consulting services (for example,
how to manage the family budget).
Q. Do Russian credit unions offer
members credit, debit and ATM cards?
No. The use of such technologies
requires large investment, only very
large financial organisations would use
this technology.
Q. What is the typical credit union in
Russia like? What would Russian credit
unions like to offer that they currently
do not?
A typical Russian credit union has
existed for a little over 5 years, has
about 1,000 members, and offers its
member’s loans and savings facilities.
Not all credit unions offer insurance
services, and we are still dreaming
about credit cards and online banking.
Q. What would be the amount of the
average credit union loan in 2009?
76,000 Rubles (1,700 Euro).
Q.How has the ILCUF helped Russian
credit unions?
The ILCUF helped in the rebirth of the
Russian Credit Union movement. In
November 1994, the Russian League
of Credit Unions was set up for the
purpose of coordinating programmes
of foreign technical and financial
support. In the Russian League there
were representatives of WOCCU,
Australian Association of credit unions,
ILCUF, Desjardins. I was very lucky to
participate in the first study trip to
Ireland, almost every person who went
with me is now the head of a big credit
union or regional association in
Russia.
In 2000, the ILCUF Board took a
decision to support three Russian
regions – Karelia, Saint-Petersburg and
Dubna (Moscow Oblast). For 10 years
the regional associations have been
forming: infrastructure of support and
services for credit unions. Nowadays
Irish credit unions are helping us in
achieving goals of increasing the
service quality in credit unions and
ultimately to become self-sufficient.
Q. How useful have visits been to
Ireland, particularly visits to Irish credit
unions?
The experience of our Irish colleagues
is so diverse and interesting. The Irish
credit union movement has a strong
legislation base, uses modern
technologies, and offers a variety of
services for members. Several
generations were brought up in credit
unions, they are professionals, and
they know how to manage their credit
union. Our Irish colleagues always
generously share their experience.
They are very kind when hosting
delegations from Russia. More than
100 specialists from Russian credit
unions undertook studies in the ILCUF
during 2001 – 2009. The participants of the
study tours to Ireland always recall the credit
unions and the people who live and work
there with warmth. When they come back to
Russia they begin to work with enthusiasm
in implementing the knowledge gained from
the Irish experience to their own credit
unions.
Q. How have credit unions helped women in
Russia and are they well represented on the
board of directors?
More than 75% of members in credit unions
are women. Women are usually very actively
involved and that is why not less than 80%
of the Board is represented by women.
Q. How have credit unions in Russia helped
people understand benefits of democracy etc?
Democracy, in my opinion, is not only about
equal abilities and possibilities, first of all,
democracy is the responsibility for making
decisions and taking actions. Credit unions
can be an excellent place for its members to
realize such studies through attracting
people in the volunteer work of elected
bodies and though the education of
volunteers.
Q.What are the main reasons for people
taking loans from credit unions in Russia?
Loans are usually taken for purchasing or
repairing houses, for purchasing
automobiles, domestic-machines, travelling,
medical expenses and education.
Q.From your knowledge of credit union
members what is the biggest benefit of them?
When we interview our members they
usually say that they are attracted by
- Available loans;
- Interest rates for savings;
- Capability to get financial advice.
The ILCU International Development
Foundation Limited is supporting the longterm development of credit unions in
Albania, Russia, The Gambia, Ethiopia,
Ghana and Sierra Leone and assisting
small development projects worldwide.
This valuable work is possible thanks to the
generous support of Irish credit unions.
For further information on the work of the
Foundation please visit our website at
www.creditunion.ie/foundations/ or contact
Áine O’Dowd on +353 1 6146746 or by
email at [email protected].
CU FOCUS AUTUMN 2010 :: 23
ILCUbis, the credit union
business intelligence service
Example 3
How does a Credit Union rate against its peers?
By using the Pearls Benchmarking report within ILCUbis, key pearls can be selected to compare your performance against your
peers by asset or membership size.
20.0
Legend Key
Preparing for Year End with ILCUbis
The date of September 30 looms for all credit unions in Ireland and
with ever increasing regulatory requirements as well as the
compulsory year end reports, it is certainly a busy time for all. It has
never been more important for credit unions to have instant access
to key information which affects the performance of the credit
union, in a manner which is easy to understand and interpret.
Phase one of ILCUbis, the credit union business intelligence
service, was launched at the League AGM in Limerick. In simple
terms, ILCUbis enables credit unions to:
• View selected areas of the credit unions operation in graphical
format
Credit Union Average
• Examine the credit union’s performance in comparison to groups
of peer credit unions
• Understand the key issues affecting this performance
• Use forecasting or trend analysis to predict future performance
• Make key decisions based on accurate and reliable information
ILCUbis utilises both credit union’s historical prudential and
annual returns as well as monthly information uploaded by the
credit union to generate a suite of reports based on the credit
union’s operation and performance.
Example 1
Will the credit union be in surplus or deficit at year end?
ILCUbis takes your credit union’s monthly income and expense line items and summarises these to give you an overall view:
Income and Expense Trend
Forecast Financial Year End
Provides view and forecasting of closing surplus/deficit at financial year end (September 30th)
Prediction of result on September 30th:
Date
1,500,000
Income
Expense
SEP-10 1,390,520 505,595
Surplus/Deficit
884,925
1,200,000
900,000
600,000
300,000
0
APR-10
Income Actual
MAY-10
JUN-10
Income Forecast
JUL-10
AUG-10
Expenditure Actual
SEP-10
Expenditure Forecast
This report, looks at the credit union’s income and
expenditure trends, and determines the credit union’s year
end position. It then calculates the surplus or deficit as the
trend continues. This will allow your credit union to determine
its financial position at year end and will help establish the
possible level of dividend which can be earmarked if the trend
continues. It also gives you the ability to make adjustments on
your income and expenses, so you can see the affect on your
surplus at year end.
Example 2
What level of bad debt provision does the credit union require?
The report within Resolution 49 Analysis provide reviews of loan and arrear trends and intimates the probable amount of loans
in arrears that will move from a lower band to a higher band. The bad debt provision can then be estimated.
In this example, looking at 19-26 weeks, there has been a marked increase over the last three months.
Note how easy it is reviewing the trends graphically, rather than looking at figures in a Res49 table.
Balance At Risk
Total Gross Loans, Total Atached Savings
2,500,000
Balance Amount
2,000,000
1,500,000
1,000,000
500,000
0
6,000,000
80
4,500,000
60
3,000,000
40
1,500,000
20
0
0
APR-10
BALANCE_OVER_53
BALANCE_27_39
BALANCE_10_18
24 :: CU FOCUS AUTUMN 2010
MAY-10
JUN-10
BALANCE_40_52
BALANCE_19_26
BALANCE_0_9
% Total Net to Gross Loans,
% Total Provisions to Net Loans
Total Arrears Analysis
Difference Between Net Loan Values and Provisions
APR-10
MAY-10
JUN-10
Total Net to Gross Loans
% Total Provisions to Net Loans
Total Gross Loans
Total Attached Savings
10.0
Asset Band Average
Membership Size Band Average
0.0
A1 Gr.Loan Arrears 10 Wks +/Tot Loans
In this example for A1 Arrears, the goal value is to have the ratio at or less than 5%. The goal has not been achieved, but the
credit union’s performance is positive compared to credit unions of a similar asset band and membership size average.
CONTACT US
Those were just some simple examples or how ILCUbis can help you during this busy period. If you would like more
information on ILCUbis - Credit Union Business Intelligence Service or are interested in placing an order, please contact
Carmel Carroll, Business Intelligence Services Manager in the ICT office on +353 1 614 6775 or [email protected]
ILCUnet, the secure credit
union computer network
Case Study on: Thurles Credit Union Limited
With two sub-offices suffering from
connection speed issues, Thurles Credit
Union was quick out of the blocks in
expressing their interest in connecting
to ILCUnet, the secure credit union
computer network. The credit union
have been experiencing some issues
with their leased line connections to two
sub-offices in Urlingford and Killenaule.
Although the credit union were paying
significant fees for a 12MB connection
via their broadband supplier, in practice
they were only receiving a 1MB
connection. This was leading to issues
in the Urlingford office, as tellers were
having difficulties in processing
transactions back to the main office.
Despite raising this issue with their
broadband supplier on a number of
occasions, there seemed to be little that
could be done to solve this problem.
After contacting the ICT office in the
League, a site survey was arranged with
Interfusion to determine the costs of
connecting to ILCUnet. Cathal Brady
from Interfusion visited the credit union
to determine the current connection
options used by the credit union, the
speeds being obtained and the costs of
providing a similar connection via
ILCUnet. Within a couple of hours, the
site survey was complete and a
comprehensive report was provided to
Thurles CU shortly afterwards.
According to Donal Scannell, CEO of
Thurles Credit Union;
“The results of the site survey were
very satisfying for us. The site survey
outlined that by connecting to ILCUnet,
we could continue to receive the same
services from our current suppliers,
experience increased connection
speeds to our sub-offices and also see
significant savings by cancelling the
leased lines we had been using”.
Once contracts were signed,
Interfusion arranged to switch the credit
union over to ILCUnet on a Wednesday,
as the credit union was closed. The
credit union’s hardware supplier, NSSL,
was also present on the day to carry out
the necessary configuration changes.
The changeover was seamless and
completed later that afternoon.
The results of the changeover were
immediately apparent with the
connection speeds to the sub offices
increasing. According to Donal:
“We’re obviously delighted with the
significant savings to our broadband
costs which we are experiencing.
However, the safety, security and speed
provided by the network to us are more
important. Connection speeds to our suboffice are now four times faster and this
has eliminated the transaction processing
issues which we had been facing. The
level of security provided by using a
dedicated credit union network is also
reassuring”.
Donal found the switch over to be
straight forward and uncomplicated.
“Interfusion was great to deal with from
the outset. There was no hard-sell and
everything was explained to us in a nontechnical manner. We found the
company very easy to work with”.
And his advice for other credit unions?
“Our experiences with connecting to
the network have been extremely
positive. Credit unions have paid to build
our own communications network and
should now take pride in connecting
to it”.
For more information on ILCUnet or to
arrange a site survey for your credit
union, please contact Malcolm Moir,
Network Services Manager in the ICT
office on +353-1-614-6911 or email
[email protected].
CU FOCUS AUTUMN 2010 :: 25
training
CU Continuing Professional
Development (CPD) –
Your questions answered!
The ongoing training and up-skilling of all credit union personnel
has always been key to the success of the entire credit union
movement and the ILCU’s new CU CPD scheme provides all credit
union personnel with a means to help maintain their knowledge
and meet best practice standards within our industry.
1. What is CPD?
CPD stands for continuing professional
development. A CPD regime operates on
the basis of an individual being awarded
CPD hours whenever they complete a
formal training activity. These awarded
hours will then be tracked and offset
against a person’s required CPD hours
for the year.
2. What are the CPD requirements?
Professional qualifications will often have
CPD requirements attached to them. For
those who hold the Qualified Financial
Advisor (QFA), Credit Union Advisor
(CUA) or Advanced Certificate in Credit
Union Practice (ACCUP) qualification
and for those who are grandfathered,
CPD requirements are basically 15
hours formal training per annum. All
CPD activity must be completed in the
calendar year, i.e., 1 January–31
December.
CPD needs to be widely spread to
ensure that knowledge is spread across
a range of topics. Consequently, the
maximum number of hours that will be
awarded for any single day is 8 hours,
while the maximum number of hours
that will be awarded for any single topic
within a day is 4 hours. The minimum
unit of CPD that will be recognised is
half an hour.
3. Who must get a qualification and
do CPD?
At present only those offering advice on
insurance products are required to hold
a qualification with a CPD requirement.
However, the financial regulator has
26 :: CU FOCUS AUTUMN 2010
indicated that they intend to extend this
requirement to those credit union
personnel who also offer credit union
core products, i.e. savings and loans.
Therefore at this time, most credit union
staff (and those volunteers who work in
an operational capacity or on credit
committees) in the Republic of Ireland
would fall within a mandatory
qualification and CPD regime.
At present no such scheme exists for
Northern Ireland staff, however best
practice and regulatory developments
would suggest that this situation may
also change in the near future and the
ILCU would strongly recommend that
Northern Ireland staff sign up to a
qualification with a relevant CPD
scheme.
4. What are my CPD requirements if I
don’t have a member-facing role?
At present none, however the ILCU
recommends that all credit union
personnel take the opportunity to meet
best practice standards in becoming
qualified and taking ongoing CPD,
including those in Northern Ireland
credit unions who are not currently
covered by any MCR regime.
Credit union volunteers should also be
aware that the requirement for relevant
qualifications is an important element of
both the ROI Regulator’s Fitness &
Probity Regime and the UK Regulator’s
Approved Persons Regime, both of
which are likely to be rolled out to credit
unions in the near future.
Participation in CPD will help to
enhance volunteer skills and knowledge
and will give the credit union the benefit
of that knowledge and understanding in
the decisions that it makes.
5. What is formal CPD?
Formal CPD can be defined as
attendance at professional meetings or
courses or other events of equivalent
standing where, in the opinion of the
administrator, the subject matter relates
to a professional or technical area that
is relevant to the professional
development of the individual. Formal
CPD generally involves ‘active’
participation in a relevant activity (e.g.
attendance at seminars, workshops, inhouse training programmes, approved
online courses, etc).
6. Where can I get CPD hours?
CPD hours can be gained by
participating in paid and unpaid events
run by the ILCU and external bodies
and through relevant internal training
organised by the credit union. This can
include:
• Current ILCU open-schedule and inhouse training courses indicated as
offering CPD credits.
• Relevant CPD seminars/roadshows
run countrywide by the ILCU (which
will be advertised through circulations
throughout the year).
• Web-based relevant e-learning
courses being developed and which
can be accessed via www.cucpd.ie
• Relevant CPD activities or events
recognised by other providers,
subject to approval by ILCU.
7. How are CPD hours monitored?
It is the individual’s responsibility to keep
a record of all CPD undertaken. For
those who sign up to CU CPD you will
need to make an annual return by 31
January each year, i.e. a formal
declaration of the formal hours
completed in the previous CPD year.
(Note: all CPD activity must be
completed in a calendar year, i.e. by 31
December.)
Signing up to a CPD scheme such as
CU CPD will greatly aid you in
maintaining your CPD and meeting your
regulatory requirements as CU CPD will
automatically track and monitor your
CPD requirements as well as providing
access to CPD events.
8. When will I have to make my first
return of CPD hours?
You will be asked to complete and return
by 31 January of each year a personal
record of CPD undertaken in the
previous year. (The first return being due
on January 31st 2011).
9. What happens if I do not meet my
annual CPD requirements or do not make
an annual return?
Any individual who fails to complete the
required CPD hours in a given year has
a chance to make up the shortfall by the
end of the following year. This grace
period will only be given once in any four
year period. Failure to comply with any
of the CPD requirements may ultimately
result in the removal of your CPD
designation or grandfathering status. You
should note that maintaining your
designation or grandfathering status is a
requirement to meet the MCR specified
by the Financial Regulator. Should you
lose your CPD designation, you might
not, therefore, be in a position to advise
or sell certain credit union financial
products.
10. What happens if I have already lost
my CPD or grandfathering status?
Any individual who has lost their CPD
status will be asked to make up the
shortfall for the previous year and in
addition may be asked to complete
penalty CPD to become reinstated.
Reinstatement can only be offered once
to any individual.
11. Why join ILCU’s CU CPD Scheme:
The benefits of joining CU CPD include:
• Free access for CU CPD members to
e-learning titles offering CPD, the first
to be an anti money laundering course
tailored specifically for credit unions
with additional credit union specific
titles to be developed and delivered in
the coming months.
• Free automatic tracking of ILCU
delivered CPD to aid you in meeting
your annual CPD record keeping
requirements. This will include regular
updates and reminders regarding CPD
hours attained and upcoming CPD
events.
• All participants who join CU CPD will
immediately enjoy discounted rates of
20% for all CPD training run by ILCU
Training (an average saving of €30
per course taken).
• Automatic allocation of CPD hours to
many current ILCU events, including road
shows and relevant chapter events.
• Monitoring of your CPD requirements to
help meet your and your credit union’s
regulatory requirements.
12. How much does CU CPD Cost?
CU CPD has been developed specifically for
credit unions and as such is the only credit
union focused CPD scheme available to
credit union personnel. Registration for the
scheme costs €100 per CPD member per
annum and this fee will be used to secure
the services of speakers for upcoming CPD
seminars, to develop new classroom based
and online CPD courses and to administer
the system. Note: Those who sign up before
October 31st this year will be covered for
this year and all of 2011.
13. How do I sign up for CU CPD?
Register using the form available from ILCU
on www.creditunion.ie/training or register
online at www.cucpd.ie , or
www.cucpd.co.uk
More Information:
For more information relating to any of the
issues dealt with in this article, please
contact the ILCU Training Department at:
E-mail:
Call:
Post:
Web:
[email protected]
+353 1 614 6964
ILCU, 33-41 Lower Mount Street,
Dublin 2
www.creditunion.ie/training
To sign up to CU CPD visit www.cucpd.ie or
www.cucpd.co.uk
CU FOCUS AUTUMN 2010 :: 27
Duleek Credit Union
Budgethelp@dcu
The Board of Duleek
Credit Union Limited
launched the
Budgethelp@dcu
campaign in December
2009. In conjunction
with a Christmas
PennyBank scheme, the
credit union’s aim in
using these two schemes
was to assist members
through a very difficult
financial period in our
economy, while at the
same time managing
their Christmas expenses
and removing the need to
borrow at the door, often
at exorbitant rates. The
scheme also fed into the
Irish League of Credit
Union’s Wolves from the
Door campaign.
28 :: CU FOCUS AUTUMN 2010
proceeds to the Budget worksheet
A personal budget plan is then drafted.
Bills are broken down into equal weekly or
monthly payments, spreading the cost of
bills evenly throughout the year. This
ensures that all bills for the year can be
paid.
The member’s credit union loan is paid
weekly or monthly at the counter, any
payment to creditors are paid by cheque,
and utility bills, rent, mobile phone, and
bins are paid through PayPoint at the
counter as they fall due.
The credit union’s aim is to get the
member on track and keep them on track.
The Budget accounts are monitored on a
monthly basis by Kay Allen, the credit
union’s Budgethelp@dcu Co-Ordinator to
ensure they are on target. Each member is
also assigned a member of staff as a
contact point. The member is given an
information pack containing a copy of
their Budget schedule, Recipe Book, and
10 Plan Shopping Guide.
The 10-Plan shows how to spend
Pictured is Kay Allen, Budgethelp Coordinator
portions of weekly food money so that the
right foods are chosen to make a balanced
diet. The member is aware that the credit
union will not be in a position to pay some
of the agreed amounts on their behalf
unless they maintain their side of the
agreement.
Raymond Cassin, Member,
Duleek Credit Union Limited
Like so many families over the last few years, myself and my family
have had a change of income into our household and with no decrease
in the bills that come through the door each month, something had to
change.
In the months since the credit union
launched this service, they have
assisted over 20 families. There is no
charge for this service unless postage
costs are incurred.
The aim of the service is to enable
members to pay off their debts at an
affordable rate, ensuring that all of
their essential requirements (food,
home insurance, car tax, car
insurance, fuel etc.) are provided for,
while at the same time cultivating a
habit of saving for periods of expense
during the year.
The credit union’s Money Advisor
meets with members by appointment
and discusses their problems without
judgment. The Advisor goes through
the member’s cash flow situation and
household budget and gives advice on
how to bring their situation under
control. It is not important how or
why people get into difficulties - what
is important is to deal with the
situation as it is now.
The credit union do not negotiate
on a member’s behalf with creditors,
but advise them of possible
reductions that may be negotiated,
and a practical amount that they can
afford to offer. A key feature of the
service is a Special Budget Account
scheme opened alongside their Credit
Union Account.
At the initial meeting a Cash flow
Spreadsheet is completed. This
outlines income / expenditure and any
surplus or deficit on a weekly basis.
Once the financial position of the
member is clear, the credit union
When I was asked if I would be interested in the budgethelp service
at my local credit union in Duleek, Co.Meath, all I needed was some
more information, which I got in spades from the ever helpful and
always on hand staff, who treat you with great respect whatever
your financial situation may be.
We now have no worries what bill is next due in the door, safe in the
Raymond Cassin, Member,
Duleek Credit Union Limited
knowledge that the money we save each week in budgethelp will pay
the bills when they are due.
I also joined the pennybank as well and this will ensure we are on top of
things by the time Santa comes around again! Has the
Budgethelp@dcu helped my financial situation and our family for the
better? ABSOLUTELY IT HAS!
CU FOCUS AUTUMN 2010 :: 29
Kick Starting
the Economy
Many small and medium sized businesses are
strapped for cash and their financial
difficulties are going to slow the economic
recovery. The banks have become particularly
risk adverse and government initiatives to
encourage them to lend more are less than
adequate, if we are to believe the anecdotal
evidence and the somewhat cautious welcome
given to them by the business organisation,
ISME, writes Colm Rapple
Some credit unions are helping out.
The trick is to devise systems that
reduce the risk of lending to small
businesses. The methods used by
St Canice’s Kilkenny Credit Union
and Dundrum Credit Union is
getting local enterprise boards
involved in vetting and monitoring
the businesses and the loans were
outlined in the Summer issue of
Credit Union Focus.
But, even with the best will in the
world, it is often impossible for a
credit committee to approve
business loans particularly for new
ventures. There can be too many
uncertainties involved. What many
small businesses need is risk
capital, shareholders who are
prepared to lose all or part of their
investment in return for the chance
of making a better return than that
available on deposit accounts.
It is hard to justify lending to a
30 :: CU FOCUS AUTUMN 2010
business that doesn’t have some
significant equity capital.
Credit unions are not, of course,
in the business of supplying such
risk capital but they could help to
make it available by facilitating the
establishment of local investment
funds. It is possible to structure
such funds so that investors qualify
for tax relief on their investments at
their top rate of tax while the risk
can be reduced by spreading the
investment over a number of
separate projects. The tax relief
comes by way of the Business
Expansion Scheme (BES), one of
the Government’s tax relief schemes
that, unlike many property-based
schemes, has never been targeted
for abolition.
I’m not aware of any such funds
established on a local basis but
various financial institutions offer
national BES funds from time to
time. Locally based funds could offer
some advantages over national
funds. Investors would be closer to
their investments and in a good
position to offer help in the form of
expertise and mentoring to the
projects involved.
Credit unions, along with other
locally based organisation such as
enterprise boards and chambers of
commerce are ideally placed to help
in the establishment of such funds.
The role of a credit union may only
be as a facilitator in having a fund
established and such a role would
depend on any necessary legal and
regulatory requirements being
satisfied. The benefits to the local
community could be significant and
some credit union members might
be willing to risk a small portion of
their savings in buying shares,
through the fund, in new local
ventures without any prompting or
advice from the credit union.
They may be new expansion of
existing ventures or totally new
businesses. Given the number of
people who have lost their jobs,
there are plenty of would-be
entrepreneurs out there.
Investing in a local BES fund
would provide those who are coming
through the recession relatively
unscathed with a way of investing in
their own communities. The idea
would be to get such individuals to
invest in an equity fund that would,
in turn, take shares in new start-up
projects. The greater the number of
projects, the smaller the risk. And
the risk of real loss would also be
greatly reduced by making use of
Business Expansion Scheme tax
incentives under which individual
investors can get full tax relief on up
to €150,000 a year put into the fund
and invested in qualifying new
ventures.
The overall limit for investment in
any one venture is €2 million but no
more than €1.5 million of that may
be invested in any one year. Within
that overall limit of the total
investment in any single venture, an
individual can claim tax relief on up
to €150,000, a lot more than most
people could possibly claim. To get
tax relief on €150,000 in any one
year you need to have an income
considerably in excess of that.
Very few people could afford to
invest that amount in a local equity
fund. But if a group of only 10
individuals were willing to invest
even €10,000 each, a fund of
€100,000 would be created to help
new ventures. They, in turn, would
promote employment and business
activity in the locality.
Under the Business Expansion
Scheme, each participant investing
€10,000 would get at least €5,000
back by way of relief from tax and
levies. The investor buys shares in
the venture and gets full tax relief on
that investment. So for every €1 put
in, a top-rate taxpayer gets a tax
rebate of 41c and up to 11c relief
from levies. But the shares have to
be held for at least five years.
Normally there is an exit mechanism
put in place to guarantee that there
is someone there to buy the shares
at the end of the five years. While
there can be no guaranteed price,
there may be some agreed process
for valuing the shares at that stage.
Investors have to accept a risk.
But provided the shares are really
worth whatever is paid for them
initially, the tax relief provides a
sizeable cushion against loss. That
proviso is a very important one by
someone making an arm’s length
investment in a BES project i.e. for
someone not directly involved in the
venture.
In essence it is a generous tax
concession but investors do need to
take care. Ideally investors should
have some hands-on experience of
the venture but the next best thing is
to invest in a professionally managed
fund. So much the better if the fund
is locally based and spread over a
number of ventures.
Those making the investment
decisions would need to adopt
professional and hard-headed
vetting procedures unswayed by
considerations other than the
potential of the proposed venture to
yield a return.
The Business Expansion Scheme
was first introduced in 1984 and
after a number of extensions it was
to have ended in December 2006.
Although other tax incentive
schemes were being phased out at
that stage as being well past their
sell-by date, the BES scheme was
extended for a further 7 years
It’s a very valuable tax concession
aimed at encouraging risk
investment in new business
ventures. Only certain categories of
business qualify. The investment has
to be made through the purchase of
company shares so that it is
impossible to avoid risk. That wasn’t
always the case. In the early days
investors could be given guarantees
of one form or another which
CU FOCUS AUTUMN 2010 :: 31
effectively protected them from any
risk. But such loopholes were closed
off many years ago.
At first the concession applied
only to manufacturing industry. It
was subsequently extended to
internationally traded services, then
to a range of tourism projects. Along
the way the list of eligible ventures
was widened out to include some
horticultural and music related
ventures. Recycling companies have
now been added to the list.
Traded services are ventures that
have to compete in the international
market place. Tourism ventures to be
eligible must be primarily aimed at
bringing tourists from abroad. While
investments in hotels, guest-houses,
and self-catering accommodation are
excluded, that still leaves a wide
range of possibilities although they
are possibly curtailed in the current
climate. They include the following:
Caravan and camping sites;
Holiday hostels; Holiday camps;
Pleasure boat hire; Horse-drawn
caravan hire; Equestrian centre
services; Sailing, yachting, marina
services; Sub-aqua centre services;
Heritage houses, castles and
gardens; Game fishing services;
Chauffeur drive for tourists; Outdoor
activity centres; Tourism guide
agencies; Tour coach services.
The project must be aimed at
attracting tourists from abroad and
must have a three-year marketing
plan approved by Fáilte Ireland.
There are upper limits on the
amount of the total investment that
goes on land and buildings. It is up
to 75% in the case of hostels,
holiday camps etc; 70% in the case
of caravan and camping sites and
equestrian centres; 65% in the case
of marina services; and 50% for
most other projects. Further
information can be obtained from
Fáilte Ireland.
The concession was extended to
the music industry in 1996 for
projects involving the production,
marketing and promotion of new
artist's studio recordings and
associated videos.
Even with the investment limits
raised they remain relatively low so
that the businesses involved have to
be in the small to medium sized
category, the type of business that is
the economic lifeblood of many
communities. The economic
recovery is being led by the export
growth of multinationals but it will
need to be sustained by local
domestic businesses. Their
sustenance and growth can be
helped by the availability of local
investment funds. There may be a
role for credit unions in facilitating
the provision of such funds.
Colm Rapple is an economist by
training and a journalist by profession.
During his career he has been business
editor of the Irish Independent, the
Sunday Independent and of the Irish
Press Group. He also writes and
broadcasts on personal finance issues
and is the author of the annual best
seller “Family Finance” which is
published by Squirrel Press.
Special General Meeting 2010
O’Reilly Hall, University College Dublin
18th September 2010
CU Advice Corner
What are PEARLS ratios and how were they developed?
Many different financial ratios and "rules of thumb" have
been promoted for financial institutions worldwide, but
few have been consolidated into an evaluation
programme that is capable of measuring both the
individual components and the system as a whole.
Since 1990, the World Council of Credit Unions
(WOCCU) has been using a set of financial ratios known
as PEARLS. PEARLS is a financial performance
monitoring system designed to offer management
guidance for credit unions. The Irish League of Credit
Unions adopted these PEARLS ratios and added
additional ratios tailored to the Irish credit union
movement.
Each letter of the word PEARLS represents a key area of
Credit Union operations:
P
Protection
E
Effective financial structure
A
Asset quality
R
Rates of return and cost
L
Liquidity
S
Signs of growth
I have seen
some recent
coverage about
phishing scams.
Can you advise
on what such scams
entail and how best to
deal with them?
Phishing is a scam in which the
fraudsters will ‘fish’ for private
information from a person via email. In
many cases, the fraudster sends an email purporting to
be from a valid company requesting that the person
updates or verifies personal details or passwords.
The email often uses fear tactics in an effort to entice the
intended victim into visiting a fraudulent website. Once
on the website, which generally looks and feels much
like the valid site, the victim is instructed to login to their
account and enter sensitive financial information such as
their bank PIN number, their Social Security number,
mother's maiden name, etc. This information is then
surreptitiously sent to the attacker who then uses it to
engage in credit card, bank fraud or outright identity
theft.
Credit Union members should note that the Irish League
of Credit Unions and Credit Unions would never ask you
for this information either by e-mail or telephone and you
should never disclose this information to anyone.
Should you receive a phishing email, you should not
respond in any way to the email, except to delete it
immediately. More information and advice on online
security, protecting your identity and your personal
information can be found at www.makeitsecure.org.
Should you wish to submit a question to the CU Queries Corner, please email [email protected] with CU Queries
Corner in the subject field. We will endeavour to answer all queries received. However, depending on the volume of
queries, this may not be possible. Queries may be shortened or amended for editorial purposes.
32 :: CU FOCUS AUTUMN 2010
CU FOCUS AUTUMN 2010 :: 33
YOURstories
Downpatrick CU
thanks Credit Unions
Staff, Directors and Volunteers of
Downpatrick Credit Union Limited
completed a sponsored climb of
Slieve Donard (Northern Ireland’s
highest mountain) in order to raise
money for PIPS Project. PIPS is a
charity, based in Belfast, which
provides help and support to those
affected by suicide and self harm.
With the help of our friends,
families, generous members and
other credit unions, we were able to
raise a total of £1,400 for this very
worthwhile charity.
Pictured below are the staff
members of Downpatrick Credit
Union Limited at the half way point
of Slieve Donard on 11th July 2010.
We have thanked our members and
would like to take this opportunity to
thank the following credit unions for
their generous sponsorships towards
our event: Newry CU, Hannastown
CU, Banvale CU, Pomeroy CU,
Ballycastle CU, Omagh CU, Ormeau
CU, Keady CU, Waterside CU,
Ballyhackamore CU, Cookstown CU,
Longford CU, and Athlone CU.
For more information and photos
of our climb, you can visit our
website, www.downpatrickcu.com
or for more information on PIPS
Project, please visit
www.pipsproject.com
Tilly still going Strong at 100
CHAPTER 25
DEFINITELY
HAS TALENT
The recent final of CU GOT
TALENT 2010 definitely proved
without a shadow of a doubt
that the youth of Chapter 25
have talent by the bucket full.
The audience were entertained
for about three hours by a
variety of acts from eleven
credit unions in the Chapter.
The judges Connor Clear,
Emmet Kirwan and Clare
Mulhall had the unenviable
task of deciding the winners.
After a lengthy deliberation
1st place went to Electra Stage
School representing
Kilnamanagh Credit Union
Limited, 2nd place to Outside
the Box from Dunboyne Credit
Union Limited and 3rd place to
Molly McHugh from Greenhills
Credit Union Limited. Of course
such an enjoyable night just
doesn't happen and all credit
must go to the Youth Officers
under the watchful eye and
guiding hand of Chapter 25
Youth Officer Tony Carey. Well
done Tony to you and your
team. A donation of €1500 was
donated to Pieta House at the
end of the night. Tony informs
us that next year's final will be
bigger and better. Tough task
Tony!
Chapter 25 Goes Racing
Father's Day saw upwards of 50
people from the various credit
unions in Chapter 25 descend on
Gowran Park for a day at the
races. In brilliant sunshine bets
were placed each way and on the
nose. jovial comments like "I had
1st and 2nd in that race", "Mine is
34 :: CU FOCUS AUTUMN 2010
still running" and "I don't think that
mine even started" were to be
heard throughout the day. The
day culminated in a delicious meal
in the Talbot Hotel Carlow where
some of us at least won a raffle
prize. A big vote of thanks must
go to the Social Committee of
Newmount Credit Union Limited believes they may have the oldest
active credit union member in the country. Their member Tilly Rooney,
who calls in regularly to lodge into her account, was 100 in January of
this year. Tilly attends the credit union AGM every year and proposes
the dinner for directors and voluntary staff. She raves how the credit
union saw the end of money lenders in the area. She refers to the credit
union as “Our Bank”.
Tilly who still does all her own cleaning and cooking is happy to
provide advice to young members. Her advice is to use the credit union
wisely and they could have a lifetime of access to credit. She is proud of
the fact that the setting up of this credit union had seen the death knell of
money lenders in the area.
Pictured is Tilly lodging the “President’s Bounty” she received to
celebrate her 100th birthday. Receiving the lodgement is Caoimhe
McCrory the youngest cashier in the credit union and looking on is the
credit union secretary Ted Rennick who was on the board of directors
when Tilly joined the credit union on 4 April 1967 just one month after it
was formed on 1 March 1967.
Chapter under the direction of
Phyl Smith for organizing such a
wonderful day. All arrived back in
Dublin around midnight safe,
sound and tired. No-one had
either won their fortune or lost
their shirt but a great day was had
by all.
A new era dawns for
Kilkeel Credit Union Ltd.
Credit Union Open
Day in Scoil Mhuire
In May, Marino Credit Union
Limited ran a Credit Union
Day in the local Scoil
Mhuire. The credit union
organised the initiative to
encourage young people to
save and give them an
understanding of how it will
stand to them in the future.
Accounts were opened for
the children with GR8saver
card given to all those who
had opened accounts. The
kids were deservedly
rewarded with free ice
cream and a performance
by a Transition Year student
band that was happy to play
an impromptu set to
entertain all present. The
day went exceedingly well
with all the kids had a great
time, especially after them
working so hard the
previous few days with the
school play and end of the
year. The day was organised
by the credit union with the
assistance of a number of
Transition Year students who
were on hand to ensure
everything went smoothly.
Saturday 26th June 2010 was a very special day for Kilkeel
Credit Union Limited when directors, members and guests
gathered for the official re-opening of the refurbished
premises and extension by Mark Bailey President of the
ILCU.
In 1979 the Credit Union purchased the former AIB
Premises at 20 Newry St and in 1981 this was listed as being
an historic building. This impressive three storey building
served us well for many years, but over time it became
inadequate for our growing membership. In January 2006
the Board took the decision to renovate the premises and
build an extension at the rear. The fact that it was a listed
building meant that there were many hoops to go through
before building could commence. The architect and builder
had to work closely with the N.I Environment Agency’s
Historic Building Unit to ensure that the character of the
building was maintained. The original portion of the listed
building was fully restored and a contrasting modern single
story extension was erected at the rear.
Kilkeel Credit Union Limited has now got a bright
attractive main office, interviewing rooms, manager’s office,
boardroom and a passenger lift which gives access to fully
self contained offices available for rent to the local
community business sector. It was great to meet founder
members, past directors, local dignitaries, friends and
members who had come to share this special day. Kilkeel
Credit Union having served the community for over 40 years
will continue to do so in premises of which we are extremely
proud.
CU FOCUS AUTUMN 2010 :: 35
Orla Awarded
WYCUP
Scholarship
Orla O’Shea
from Tralee
Credit
Union
Limited
has been
selected
as one of
five
candidates to
win a scholarship to
attend the 2011 World Credit Union
conference in Glasgow, Scotland.
Orla was originally selected by the
Irish League of Credit Unions as one of
two representatives of the Irish credit
union movement to attend WOCCU’s
Young Credit Union People Programme
(WYCUP). Orla attended the World
Credit Union Conference in Las Vegas
in July and participated in wide-ranging
discussions and workshops on key
issues affecting the international credit
union movement.
Following deliberations by the
Judging Committee, Orla was one of
the five candidates awarded a WYCUP
scholarship. The scholarship is
awarded annually to outstanding
nominees whose skills and
accomplishments have already made a
significant impact within their own
credit union system. The individuals
selected for the scholarship are those
the committee believes to have the
greatest potential to contribute to the
international credit union system.
Commenting on her success , Orla
stated
“It was a great honour firstly to be
selected as one of the two young
people to represent the Irish credit
union movement at WYCUP. To then be
selected as one of the five winners tops
off the whole experience. The
programme provided me with a unique
opportunity to network with young
credit union professionals from all over
the world. It was a terrific experience
and I’m looking forward to putting
some of the initiatives I’ve learned
about into action.”
Pictured is Orla receiving her award
from Pete Crear, President & Chief
Executive Officer - World Council of
Credit Unions (WOCCU)
36 :: CU FOCUS AUTUMN 2010
Carer of the Year Award
sponsored by Chapter 5
Chapter 5 of the Irish League of
Credit Unions has donated €2,000
to the Irish Red Cross which was
used as a prize for the Irish Red
Cross’s ‘Carer of the Year’ award.
This award is given to a family carer
who is an Irish Red Cross volunteer
or member of the public. The aim of
the award is to acknowledge the
hard work and dedication of
informal carers at home and in the
community. They provide an
essential service to the vulnerable
and display true humanitarian
values.
This year, Margaret Rice from Co.
Monaghan was the worthy recipient
of this award, which was kindly
donated by Chapter 5. The decision
was made unanimously by a
selection panel who agreed that
Margaret’s dedication and hard work
is truly exceptional.
Niall Friel and Sean Thompson
from Chapter 5 were present for the
presentation to Margaret in Cavan
on 14th June. Pictured is Margaret
receiving her award from Brendan
Smith T.D., Minister for Agriculture,
Fisheries and Food.
Dedication of the Martin Mullen Training
Room in Balbriggan CUs premises
Not yet twelve months from the untimely
death of their former Manager, Martin
Mullen, Balbriggan Credit Union Limited
honoured his memory by unveiling a
plaque and dedicating and re-naming
their former Board Room the ‘Martin
Mullen Training Room’. The unveiling
ceremony was officially carried out by
Martin’s son, Gavin in the presence of
Martin’s family; his widow Clair; sons
Daniel and Stuart, and daughter Lisa.
Stuart and Lisa were accompanied by
their partners. Also present were
Martin’s surviving brothers, sisters,
brothers-in-law and sisters-in-law;
nephews and nieces also attended as
well as specially invited guests from near
and far.
The Chairperson of Balbriggan Credit
Union Limited, Noeleen Culbert gave a
heart-warming speech about Martin and
his dedication to everything that was
connected with the Credit Union. He had
formed a great deal of strong
relationships over the twenty years he
was working with staff particularly – all of
whom were present; also with Directors
and Volunteers over those evolving years.
His commitment to BCU and the
movement were nothing short of
legendary. The event was just a small
way for the credit union honour his
name and to perpetuate his memory.
Clair also had some very special and
poignant words to say about her sadly
departed, and greatly missed, husband.
She thanked BCU for the very generous
gesture in naming the old Board Room
in Martin’s honour. The immediate and
extended family were very proud of this
Macnean Credit Union
Limited comes of age
St. Dominic’s Pay Tribute to Retiring
Board Members
St. Dominic’s Credit Union Limited has paid tribute to two retiring board members,
John ‘Jack’ Moore and Breda Hannon. Jack spent over 40 years as a voluntary
activist with the credit union, serving on the Board of Directors and also on the
Supervisory Committee. His last position, which he held for over 6 years, was Hon
Treasurer of Saint Dominic’s. He gave his time freely from collecting money in the
Dominican office, later in Mary’s street and then when staff was employed doing
voluntary work right through four decades. The credit union wish Jack and his
wife Maura health and happiness into the future.
Breda served the Credit Union for over two and a half decades. Breda’s ethos
was always to go that extra mile for the benefit of members. She was part of nearly
the original structure set up in Mary St. She learned the Voluntary Ethos of the
Credit Union from her friend and fellow credit union President, the late Dick
Larkin and as a Woman president on two separate occasions Breda was held in
huge regard by both her fellow directors and staff. The credit union wish Breda
and her husband Christy health and happiness and many thanks from all in St.
Dominic’s Credit Union Limited.
Macnean Credit Union Limited celebrated its 21st anniversary
recently with a dinner dance in The Carlton Hotel Belleek. The
night was a great success for our Guests which included ILCU
President Mark Bailey, Chapter 17 representatives, and credit
union members.
Macnean Credit Union Limited was registered in July 1989
after almost a year of study undertaken by 22 people from bond
area. They met every Tuesday night for two hours under the
guidance of Jack Gormley, Peter McAloon and Alfie
Montgomery.
Above are the Board of Directors, Supervisors and staff of
Mcanean Credit Union Limited with Mark Bailey, President,
Irish League of Credit Unions.
‘Dedication’ and it will have a revered
place in their hearts.
Finally, a poem dedicated to Martin’s
memory was read out by staff member,
Brian Howard, which encompassed the
many heart-warming, amusing and
varied facets of their experiences
working with Martin over the past twenty
years.
Galway Credit Unions and Galway
Bay FM Working Together
At the recent launch of the new
look Galway Bay FM Baycaster,
Mr Mark Bailey, President of the
Irish League of Credit Union
complimented the credit unions
of County Galway who
subscribed to the opportunity of
working together with their local
radio station.
The attractively designed
Baycaster carries the names of
Galway’s 20 Credit Unions and
highlights the fact that 45 offices are
serving the credit union membership
throughout the County. As part of this
working together sponsorship, Galway
Bay FM will broadcast 20 credit union
adverts every week and each Credit
Union will receive an annual visit from
the Baycaster for promotional
purposes. Through this partnership it
is hoped to raise awareness of the
benefits accruing to local communities
by supporting their local credit union
and radio station.
Many representatives of the Western
Chapter of Credit Unions attended the
launch. These included Pat Lawless
(Chairman Chapter 16), project
organisers Micko Bodkin, Gerry Walsh,
Paddy O’Donnell and Joe McCarthy.
Seamus O’Connell (Sales Manager
Galway Bay FM) and Gerald Du Bois
(League Board Director) were also
present.
CU FOCUS AUTUMN 2010 :: 37
Legislative
Update
ROI
Central Bank Reform Bill 2010
The Central Bank Reform Act 2010
(“the Act”) has been passed by the
Oireachtas and was signed into law
by the President on 17 July 2010.
The Act, however, requires a
commencement order to take effect
and same is awaited.
The Act provides the statutory
basis for merging the functions of
the Central Bank and the Irish
Financial Services Regulatory
Authority (“IFSRA”), creates a
single, fully-integrated Central Bank
and provides for the dissolution of
IFSA. The Central Bank will be
responsible for the prudential
supervision of regulated financial
service providers, the conduct of
business, including protection of
consumer interests, and the
stability of the new financial system
overall.
The Act also makes amendments
to section 35 of the Credit Union
Act, 1997 (as amended) to deal
with the issue of rescheduling of
loans. An intensive lobbying
campaign was carried out by the
credit union movement seeking to
reduce the onerous nature of the
provisions as originally drafted. The
provisions were subsequently
amended by the Minister for
Finance whereby the systems,
controls and reporting requirements
were specifically tied to the lending
requirements of the new section 35
and the wider powers to enable the
Central Bank to make provisions
otherwise than by rules was
38 :: CU FOCUS AUTUMN 2010
introduces various rights and
obligations for cohabiting couples.
In particular the Act establishes
the creation of a new legal
relationship of Civil Partnership for
same-sex couples who formally
register their relationship and which
may terminate only on the death of
a partner or dissolution by a court of
law.
Credit unions should be aware
that the Act amends section 35(10)
and section 114(2)(b) of the Credit
Union Act, 1997. The amendment
to section 35(10) means that a
NI
Regulatory Reform
dropped. The ILCU subsequently
wrote to the Minister to request that
he utilise the power available to him
in section 2 of the new legislation to
defer the commencement of these
provisions until such time as
detailed discussions with the
Department of Finance and the
Financial Regulator take place on
the proper implementation of the
new provisions. In presenting the
Bill to the Seanad, the Minister for
Finance had indicated that
reasonable conditions and
transitional arrangements would
apply, therefore, it is hoped that
there may be room for further
negotiation around the transitional
arrangements for the introduction
of these changes.
Civil Partnership and Certain Rights and
Obligations of Cohabitants Act 2010
The Civil Partnership and Certain
Rights and Obligations of
Cohabitants Act 2010 (“the Act”),
was signed into law on 19 July
2010. A Ministerial Order will be
required to bring the Act into effect
and same is awaited.
The Act deals with both the civil
registration of same-sex
partnerships (Civil Partnership) and
the rights and duties of cohabiting
couples. The Act introduces very
significant changes to the legal
status of unmarried couples, both
same-sex and opposite-sex and also
Legislative
Update
credit union may accept a
guarantee for a loan from an officer
of the credit union for his/her Civil
Partner. The amendment to section
114(2)(b) means that a person shall
not be qualified for election as
auditor of a credit union if he/she is
the Civil Partner of an officer or
voluntary assistant of the credit
union.
Amendments to the Standard
Rules for Credit Unions (Republic of
Ireland) will be brought to League
AGM 2011 to reflect the new
legislation.
Credit unions will be aware that the
ILCU made a submission to the joint
consultation paper on “Proposals for
Regulatory Reform of Credit Unions
in Northern Ireland” issued by the
Department of Enterprise, Trade and
Investment (Northern Ireland)
[DETI(NI)] and HM Treasury. The
ILCU submission to this consultation
paper can be found on the ILCU
website: www.ilcu.ie. The next stage
in this regulatory review process is
the examination of the submissions
received to the joint consultation
paper and the publication by
DETI(NI) and Treasury of their
responses to this submissions.
A meeting was held on 14 June
2010 at Stormont between
representatives of the ILCU and the
First Minister and Deputy First
Minister of the Northern Ireland
Assembly to discuss the recent
developments in the review of the
regulation and legislation of credit
unions in Northern Ireland. The
ILCU representatives at the meeting
explained the ILCU’s position
regarding the proposed reform to the
regulation of credit unions as outlined
in our submission to the consultation
paper. Both the First Minister and
Deputy First Minister were very
supportive of the good work done by
credit unions in their local
communities and as such strongly
supported the view that members of
credit unions in Northern Ireland
should be able to avail of the same
levels of services from their credit
unions as their counterparts in the
Republic of Ireland and Northern
Ireland. They also agreed that
methods by which credit unions
would be permitted to invest in their
local communities should be
examined.
In addition, credit unions will be
aware that the new
Conservative/Liberal Democrat
Government recently announced an
intention to reform the regulation of
the financial services in Great Britain.
The proposal is to overhaul the
system of financial regulation by
disbanding the Financial Services
Authority (“FSA”) and giving the
Bank of England powers over macro
prudential regulation through a newly
established Financial Policy
Committee. It is also proposed that a
new prudential regulator - the
Prudential Regulation Authority - will
be established under the control of
the Bank of England headed by a
new Deputy Governor (the first of
whom will be current Financial
Services Authority Chief Executive,
Hector Sants), and which will be
responsible for supervising the safety
and soundness of individual financial
firms including credit unions in Great
Britain. It remains to be seen how
these proposed reforms of regulation
of financial services in Great Britain
will impact on the current review of
the regulatory structure for credit
unions in Northern Ireland.
Rule Amendments
Amendments to Rule 159 and Rule
180 of the Standard Rules for Credit
Unions (Northern Ireland) were
approved at League Annual General
Meeting 2010. Credit unions will
need to bring these rule
amendments to the credit unions
annual general meeting for approval
by the members. Details of the rule
amendments are contained in the
Year End documentation.
CU FOCUS AUTUMN 2010 :: 39
Economic
Commentary
John Knox, ILCU Research and
Development Department looks
at the performance of the Irish
Economy so far in 2010.
construction sectors. The general
moratorium on recruitment to the
public service is expected to place
some further downward pressure on
employment levels. Employment is
projected to be broadly unchanged in
2011, with a decline in the region of
0.3% giving an average
unemployment rate in the region of
13.3%. It is, however, important to
note that the forecasted fall in the
unemployment rate will arise solely
from a further fall-off in the labour
force caused by emigration.
Consumer Price Index
The Central Bank believes that annual
CPI inflation rate will likely turn
positive in 2011 and has projected
that it will average 1.2% next year.
Overview
The data from
the Central Bank,
ESRI etc. showed that in the
first half of the year the economy
performed largely as had been
expected. It would appear that the
Irish economy is undergoing a modest
recovery this year following an
exceptional period of decline in the
previous two years. The level of
output, as measured by Gross
Domestic Product (GDP), is forecast
to record a small increase of about
0.8% this year following a decline of
7.6% in 2009.
The recovery in world demand has
been somewhat stronger than
expected this year, and the outlook is
for an ongoing recovery in world
demand next year. Exports, which
40 :: CU FOCUS AUTUMN 2010
remained on a moderating
downward trend since, down 7%
through 2009, reflecting weak
consumer confidence and low
disposable incomes.
Consumption growth in volume
terms is likely to remain subdued in
the short-term and
consumers spending behaviour on
the whole remains reasonably cautious.
A notable exception is the strong sales
figures for new cars due to the
scrappage scheme. Overall, personal
consumption is forecast to decline by
1.2%, in year-on-year terms, this year.
Looking further ahead, the Central
Bank predicts a modest pick-up in
personal consumption of 0.9% for
2011, in line with some recovery in
disposable incomes and a further
gradual improvement in consumer
sentiment.
proved to be resilient during the
downturn, have been the main
driver of the recovery in overall GDP
growth in the first half of 2010.
Following a sharp decrease last year,
domestic demand has continued to
decline this year, but at a slower rate
than the last two years. Consumer
expenditure dropped sharply at the
beginning of last year and has
The Labour Market
The scale and speed of the fall in
employment, to date, has been
dramatic. According to data released
by the CSO the number of people on
the Live Register in July 2010 climbed
by 8,500 to 452,500. The CSO said
the unemployment rate rose to 13.7%,
from 13.4%, in June. A decline in
employment of around 3.9% is
projected in 2010, with further job
losses expected in the financial and
Property Prices
The Permanent TSB/ESRI house price
index recorded a cumulative nominal
fall in house prices of 34.1% between
the end of 2006 and the first quarter
of this year. Significant differences in
price trends across regions have
emerged, as house price falls in
Dublin accelerated to 10.3% in the
first quarter while price falls outside
Dublin moderated somewhat to 3.5%.
Recent house price data from Daft.ie,
which are based on asking prices,
suggest further declines in house
prices nationally of just over 4%.
Private sector rents rose by over 1%
in the three months to May, which
compares to a quarterly fall of 0.7% in
February. Given continuing
unemployment, falling disposable
incomes and continued net outward
migration, there is little prospect of
any notable pick-up in rents this year.
The Public Finances
In early July, the key half-yearly
Exchequer returns were published,
showing an Exchequer
deficit in the first six months of the
year of €8.9 billion. This figure was
down significantly from the deficit of
€14.7 billion over the same period in
2009. Overall, the Exchequer deficit
was broadly in line with expectations.
In terms of revenues, tax receipts
amounted to €14.4 billion in the first
half of 2010, a fall of 8.7% year-onyear. This was slightly weaker than
expected. Income taxes were 5.8%
behind their expected target, a
shortfall of €300 million in the first
“
The Central Bank
believes that
annual CPI inflation
rate will likely turn
positive in 2011 and
has projected that
it will average 1.2%
next year
half of the year, illustrating the
extremely difficult labour market
conditions.
Revenue
The tax figures so far for 2010 have
also been broadly in line with
expectations, although there
was a modest monthly shortfall in June.
The monthly tax data remains volatile
however, and so annualised receipts
are seen by many as a better indicator
of emerging trends.
Expenditure
On the expenditure side, total voted
spending in the first half of the year
amounted to €21.5 billion, a decline of
6.2% in annual terms. Increased
national debt interest charges and
related payments also weighed on the
expenditure side of the Exchequer
returns, increasing to nearly €2.9 billion
in the first half of the year and in the
process accounting for a fifth of all
taxation receipts, as compared with
€2.4 billion over the same period in
2009.
Exchequer Financing
The Exchequer Returns show
borrowing of €7.6 billion in the first half
of 2010, down substantially from the
€21.6 billion borrowed over the same
period in 2009.
Outlook for 2010
In terms of the fiscal outlook for 2010,
the latest Central Bank estimates point
to an underlying General Government
deficit of 11.8% of GDP, which is
similar to the targeted deficit in Budget
2010 of 11.6%. In March, the
Government announced the payment
of promissory notes to Anglo Irish Bank
and Irish Nationwide, amounting to a
combined €10.9 billion. With the
promissory note to Anglo Irish Bank
now being reclassified within the
General Government Sector, the deficit
for 2010 would increase to a projected
17% of GDP. Ultimately, taxation and
expenditure programmes will need to
become more closely aligned, with an
underlying gap at present of
approximately €20 billion, as the
economy reverts to more normal and
sustainable growth.
CU FOCUS AUTUMN 2010 :: 41
Surge in Global CU Savings & Loans
Credit unions in nearly all regions
worldwide saw an increase in member
savings and loan activity during 2009,
according to World Council of Credit
Unions' (WOCCU) newly released 2009
Statistical Report. The trend illustrates
the increasingly more important roles
that credit unions and other financial
cooperatives worldwide played in their
members' lives during last year's global
recession.
Total savings for all responding credit
unions reached more than US$1.1
trillion, the highest level recorded since
WOCCU first began conducting the
annual survey in 1972. The rate of
growth represents nearly a 15%
increase compared to the US$995
billion in savings reported in 2008.
Loans were another indicator
demonstrating strong growth over the
previous year, climbing to nearly
42 :: CU FOCUS AUTUMN 2010
US$912 billion from US$847 billion in
2008. This sizeable increase is further
accentuated in contrast to a slight
decrease in loans globally between
2007 and 2008. Annual survey
respondents from 97 countries
worldwide reported that 49,330 credit
unions served nearly 184 million
members.
In recent years, credit unions
worldwide have seen notable growth in
assets, membership, savings and other
indicators. Cumulative assets reached
nearly US$1.4 trillion in 2009, up from
US$1.2 trillion in 2008, and reserves
reached nearly US$120 billion in 2009,
up from slightly more than US$115
billion in 2008. Strong financial
performance demonstrates members'
renewed faith in credit unions'
resiliency during difficult economic
times.