the magazine of the irish league of credit unions – autumn ... · pdf filepictured with...

Reading CU Focus now equates to one hour of your annual CPD requirements

Launch of NewCredit UnionWebsite

Prepaid Cards in NorthernIreland

Surge inGlobal CUSavings &Loans

SGM set forO'Reilly Hall,UCD

The magazine of the Irish League of Credit Unions – Autumn 2010

Launch of Credit Union Poster Competition

CU FOCUS AUTUMN 2010 :: 3

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

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 andPR. Charles McLaughlin Head of IT.

Designed by Outburst Design. Please Note: The deadline for copy and photos for the next issue of CU Focus is 29th October 2010. Please mark for the attention of the editor, CU Focus CommunicationsDepartment. The views expressed in this issue of the CU Focus are not necessarily the views of the Irish League of Credit Unions. Advertising: The placement of an advert does not imply endorsement of theproduct or service advertised, either by the magazine or its publisher. The CU Focus will not knowingly carry false or misleading advertising. Articles The CU Focus would like to hear your news and views.Send in any newsworthy stories or photos. The CU Focus tries to publish all appropriate information submitted, but may be precluded by space constraints.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

SAFE, STRONG, SECURE - that is the message from creditunions unlike other financial institutions. According to ProfessorPatrick Honohan, a building society located in Ireland mayrequire a bail out in excess of 3 billion euro and one of the mainbanks may require up to 24 billion euro of taxpayers assistance.The Governor of the Central Bank is not optimistic that reformscan prevent future bank collapses. Also the banking sector isforecasting a loss of 10,000 jobs by the end of 2010. All of thishas a profound effect on society, the loss of jobs, business slowdown and much negativity is a cause for concern.

The credit union movement must remain positive and aboveall prudent by astute management, curtailment of costs and byall working together in the true co-operative spirit. We are onlytoo aware of the challenges facing credit unions, be it fromchanges in regulation or from the unfortunate situations thatmany credit union members find themselves in, mostly throughno fault of their own. Borrowers in credit unions must beadvised to contact their credit unions at the first sign of achange in their financial situation to prevent arrears developing.Seeking help early is the key.

Credit Union Regulatory ForumThe Registrar of Credit Unions is inviting representatives fromcredit unions in the Republic of Ireland to join him at theinaugural Forum which is to be held this autumn. The aim ofthe forum is to create a formal framework for regular directcommunication between credit unions and the Regulator. Theagenda for this new venture will include the Strategic Review,the 2010 year-end process and a new approach to regulatoryengagement. The invitation to the forum is primarily extended toofficers in credit unions i.e Chairman, Treasurer, Secretary,Chairman of the Supervisory Committee and where relevantManager. Representatives of the Irish League of Credit Unionshave not been included.

Strategic ReviewThe formal announcement by the Central Bank and FinancialRegulator on the 27th July of an independent strategic review ofthe credit union sector in Ireland came as no surprise to thosewithin the credit union movement. The review was announcedover 12 months ago and indeed the Irish League of CreditUnions has sought this review of the sector for some time now.

While much of the focus since the announcement has beenon the financial performance of credit unions, the review is anopportunity to strengthen the credit union movement byidentifying the key role played by credit unions in society andunderpinning that role by reflecting on the supportmechanisms, governance, operation and indeed the overallregulatory and legislative framework for credit unions.

Bye for now - CU again.

ContentsEditorial

Main cover photo:Pictured with Rob Ross, RTEchildren’s TV Presenenter atthe Launch of the 27thannual All Ireland CreditUnion Poster Competitionwere Aisling Timmons (15),Kate Kavanagh (8), SarahMinto (7), Adam Minto (5),Niamh Curry (6) and EllenColeman (4).

CU FOCUS AUTUMN 2010 :: 0504 :: CU FOCUS AUTUMN 2010

StabilisationSupportBackground On 23 June 2010, a consultationpaper entitled Stabilisation Supportfor Credit Unions (‘CP 44’) waspublished by the Central Bank andFinancial Services Authority ofIreland which invites the views ofparties with an interest in the topic.

Process of ConsultationFollowing the publication of CP 44,the League initiated an extensiveprocess of consultation on the matterwhich included:

• Discussion at League Board andAdministration Committee level(being the sub-committee of theLeague Board which administersthe League’s Savings ProtectionScheme (‘the SPS’);

• The convening of eight roadshowsnationwide during July 2010 atwhich the views of attendees wereexpressed and recorded; and

• A League Special General Meetinghas been convened for 18September 2010 in order todiscuss a motion on the issue.

The League’s submission on CP 44(which is required to be made on orbefore 24 September 2010) will beinformed by the views which havebeen expressed during the abovereferenced process of consultation.

CP 44 – Specific Models/Options forConsultation The consultation paper seeks viewsand comments from credit unionsector stakeholders on six stabilisation models. Interested partiesare invited to indicate the preferredstabilisation option(s) for the creditunion sector and the reasons why (orto rank options in order of preferencewhere appropriate). The six options areas follows:

1. Statutory Stabilisation Schemeunder Central Bank Control

2. Statutory Stabilisation Scheme withthe Executive Appointed by CentralBank

3. Non Statutory - Single VoluntaryStabilisation Scheme

4. Non Statutory - Multiple VoluntaryStabilisation Schemes

5. Non Statutory – Maintain SPS in itsCurrent Form

6. Wind Up and Transfer the SPS

CP 44 - Specific QuestionIn addition, the consultation paperseeks views on the following questions:

1. Should there be stabilisationarrangements in place for the creditunion sector?

2. Should stabilisation arrangementsbe on a statutory or voluntary basis?

3. Should there be one stabilisationscheme for all credit unions ormultiple schemes?

4. What should happen to the existingSPS fund?

5. How should the ethos of the creditunion movement be protected underany arrangements?

These questions and proposed responsesto same were discussed as part of theLeague’s July 2010 stabilisationroadshows.

Negotiating Appropriate StabilisationArrangements for Credit Unions The League Board has proposed amotion for the consideration of LeagueSpecial General Meeting September2010 which, if passed, would have theeffect of instructing the League Board toengage in negotiations with the relevantauthorities to achieve a stabilisationsupport scheme for credit unions basedon the following parameters:That the current SPS will evolve tobecome a Scheme under a new CreditUnion Stabilisation Company:1. which will operate in accordance with

the self help and co-operative ethos ofthe credit union movement;

2. with the board of directors comprisingas many representatives of the creditunion movement as may be agreed innegotiations;

3. which adheres to as many of theprinciples* as may be agreed innegotiations;

4. with membership open to all creditunions in the Republic of Ireland andNorthern Ireland subject to their abilityand commitment to comply with the

requirements of the Scheme;

5. with legislative and regulatoryapproval in both jurisdictions;

6. with periodic reviews of the adequacyof the stabilisation fund within theScheme to be conducted, asappropriate; and

7. memoranda of understanding to beagreed with the credit unionRegulators in the Republic of Irelandand Northern Ireland under anumber of headings, to include:

a. management and administrationof the Scheme;

b. probity and competence ofdirectors and management of theScheme;

c. conditions and procedures onprovision of assistance from theScheme;

d. access to ensure that the Schemeis open to all credit unions subjectto their ability and commitment tocomply with the requirements ofthe Scheme;

e. contributions to the Scheme bycredit unions;

f. procedures for auditing theaccounts of the Scheme; and

g. arrangements for periodic

reporting to the credit unionRegulators in the Republic ofIreland and Northern Ireland.

* Credit Union Stabilisation PrinciplesA Credit Union Stabilisation Scheme forthe Irish movement should:

• Be complementary to depositprotection.

• Depend on effective and enforcedregulation and compliance withcompulsory financial and operationalstandards.

• Demand robust monitoring,supervision and examination of creditunions by the administrative authority.

• Have power to intervene when creditunions fail to meet required financialand operational performance targets.

• Be financed by the credit unionmovement.

• Provide technical and/or financialassistance which is time limited.

• Depend on a strategic and monitoredplan of action to re-stabilise creditunions.

• Include actions to amalgamate/windup credit unions which cannotachieve independent viability.

• Be open to all credit unions in the

Republic of Ireland and NorthernIreland subject to their ability andcommitment to comply with therequirements of the Scheme.

• Be constituted so as to allow theaccounts of the Scheme to beconsolidated within the accounts of theIrish League of Credit Unions.

The League Board’s motion wascirculated to member credit unions on 30July 2010 along with an invitation toevery member credit union to submitamendments to same on or before 02September 2010.

Conclusion We feel that the seriousness of this topicfor member credit unions into the futurecan and should not be underestimated.That being so, we look forward to a fulldebate of the subject, the related motionand any amendments thereto at theupcoming SGM which will convene on 18September 2010.

Following the SGM, the League Boardintends to engage constructively with theCentral Bank & Financial ServicesAuthority of Ireland and to advocate, onbehalf of member credit unions, for theviews which have been expressed duringour consultation process.

Any comment you may wish to makeon the issue of stabilisation support forcredit unions or any queries you mayhave on the matter should be directed tothe Head of Legal & Secretariat [email protected] or (00 353 1)6146950.

Usage of Internet basedTechnology by Irish Credit Unions

website allows members to requestinformation on share and loanbalances, and to request statements.It also accepts applications formembership, loans or shareaccounts. Finally, at the third(highest) level, a transactionalwebsite also allows members tocomplete transactions such aspaying bills, make loan payments ordeposits, and transfer funds betweenaccounts.

In 2008 and again in 2009 weaccessed all credit union websites inIreland and assessed theirfunctionality in terms of the threeaforementioned categorisations. Inaddition, we sourced data on thehistory of the web sites from theInternet Archive2. Of the 419 creditunions in our sample, 185 do nothave a web presence; there are afurther 19 with web sites underconstruction; while 213 having a liveweb site of varying degrees ofsophistication. In Table 1 we profile the web-based

functionality of Irish credit unions, asof September 2009, by commonbond type, in terms of credit unionlocation and by credit union size(small credit unions – assets lessthan €10m; medium credit unions -assets between €10m and €40m;and large credit unions – assetsgreater than €40m).

From Table 1 we see thatoccupational credit unions have ahigher adoption rate than theircommunity counterparts. They alsohave a higher proportion of the more

sophisticated transactional websites.This may be explained by the factthat the fixed set up costs of a new ITinnovation, such as internet banking,could be partly subsidized by thesponsoring organisation, be itemployer or association. An adoptionrate of 65% by urban credit unionsout strips the 42% adoption rate oftheir rural counterparts with urbancredit unions also having a muchhigher proportion of the moresophisticated transactional websites.In part this is because urban creditunions are on average much largerand hence may both be better ableto meet the costs of such serviceprovision and have in place therequisite customer base to justifysuch investment. In addition, it mustbe remembered that the Fibre OpticMetropolitan Area Networks confersa competitive edge on many urbancredit unions. From Table 1 we alsonote that the overall adoption rate ofweb-based facilitation for membersincreases with credit union size.Furthermore, larger credit unionshave a greater proportion oftransactional websites suggestingthat as a credit union grows it alsoexpands the range of services onoffer to members by way of IT.

Products and Services ProvidedIn this short piece we do not reportthe full range of IT services offeredby credit unions rather we now takethe opportunity to highlight somegeneral trends between 2008 and2009. First, there is a general

increase in the number of servicesoffered between the two years, whichcan be largely attributed to anincrease of one third in live websites.Second, we note a substantiveincrease in the number of creditunions providing electronic monetarytraffic, in the form of salary deduction(51 to 76 between ’08 and ’09) andElectronic Fund Transfers (84 to 108between ’08 and ’09). Third, therehas been a pronounced increase inonline account access (104 to 131between ’08 and ’09) and online loanapplication (99 to 109 between ’08and ’09). Fourth, other financialtechnologies such as phone bankingand ATMs have yet to make asignificant impact in the Irish creditunion industry, both having adoptionrates of less than 10%. This may beindicative of no universal IT networkwithin the Industry on which suchtechnologies could be more easilyimplemented

Pace of Internet AdoptionIn Figure 1 we map out diffusiontrends for internet technology adoptionby Irish credit unions. From 1998 to2009, we plot the number of creditunions with registered websites, thenumber with live websites, the numberwith either interactive or transactionalwebsites (jointly categorized in Figure1 as non-informational) and the assetsize of the average credit union.

Figure 1 shows that 21% of Irishcredit unions had registered aproprietary web site in 2002 with thisrising to 56% in 2009. However, in2002 only 14% had a live presence

Donal McKillop (([email protected]) is Professor of Financial Services at Queen’sUniversity Belfast. Barry Quinn ([email protected]) is a researcher at Queen’sUniversity Belfast focusing on issues pertaining to credit unions.

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

adopted

27 185 131 81 25 94 93

Adoption Rate3 61.36% 52.71% 65.17% 41.75% 20.16% 56.63% 88.57%

Table 1: Credit Union Characteristics as Influences on Website Adoption

Consumer uptake of IT innovation infinancial services is of coursedependent upon the IT sophisticationof the customer base as well as theiraccess to technology. In Ireland theIT infrastructure has been steadilyimproving. In 2004, the IrishGovernment sponsored infrastructureproject Fibre Optic Metropolitan AreaNetworks was introduced aimed atpermitting open access to privateenterprise of ‘always on’ broadband.Phase I of this project saw theinstallation of fibre optic networks in27 provincial towns with Phase IIplanned to add a further 66 towns1.That said a recent OECD surveysuggests that Ireland still lags behindthe OECD average for broadbandsubscribers per capita.

Against the background of anincreasingly conducive environmentwithin which to offer IT basedproducts and services we now presentsummary findings from two surveysdesigned to gauge the level of suchprovision by Irish credit unions.

Internet Technology AdoptionAs a start point we constructed threecategories of internet technologyadoption. These categories weredependent on the existence andcapabilities of credit union websites.At the first (lowest) level, aninformational website displays generalinformation on interest rates, andcontract details. At the second(intermediate) level, an interactive

IntroductionTechnological change has impacted heavily on thestructure, operations and economics of the financialservices industry. Information technology (IT) alters theways in which customers access services, mainly throughautomated distribution channels such as the internet,phone-based and other banking access channels. IT canalso yield cost savings associated with the managementof information (collection, storage, processing andtransmission), and by substituting paper-based andlabour-intensive procedures with automated processes.

06 :: CU FOCUS AUTUMN 2010 CU FOCUS AUTUMN 2010 :: 07

increasing to 54% in 2009. In 2002,8% of credit unions had a web sitewhich was non-informational withthis rising to 36% in 2009. FromFigure 1, we also note that thegrowth in technology adoption goeshand-in-hand with the growth inaverage credit union size. This canhave one of two implications, eitherthat technology adoption fostersasset growth or that a requisite assetsize is required before a credit unionis in a position to invest in IT.

Research on the credit unionmovements in the US and Australiasuggests that it is size which drivessubstantive IT adoption. Concluding CommentsThe above results are a snapshot attwo recent points in time andconsequently do not do justice to thejourney that individual credit unionshave made in achieving their currentlevel of IT sophistication. It is ofcourse the case that the ITsophistication of Irish credit unions

lags that of many other movements.For example in the US IT adoption bycredit unions is now very much on apar with that of other financialinstitutions, and technology (andderegulation) has succeeded inblurring the difference between otherretail financial institutions and creditunions. Furthermore, IT in productprovision has enhanced theeffectiveness of US credit unions asfinancial service providers. Technologyis of course expensive and individualcredit unions simply do not have thescale to effectively and efficientlyexploit technological advances on theirown. Therefore we feel that the futurefor Irish credit unions is the creation ofa movement wide integrated ITsolution for the provision of financialservices and products to members.

1. Since July 2009, Area Networks in Tralee,Killarney, Castleisland, Listowel, Navan,Bundoran, Ballyshannon, Blarney and thecombined Carrigaline/Ringaskiddy /Passage Westnetwork have been activated.

2. The Internet Archive is a non-profit researchfocused organization that was founded to build aninternet library which includes a database ofarchived web pages.

3. Adoption Rate equals number of credit unionsof this characteristic with a website/ total numberof credit unions with this characteristic expressedas a percentage.

Figure 1: The diffusion of Web site and Average Credit Union


In the midst of economic uncertainty, it’smore important than ever to have a handleon your finances, and in credit unionterms, to provide your members with thebest tools to get to grips with what they’respending, and more importantly, howmuch they can afford to spend.

More and more consumers have beenopting for debit or prepaid cards - such asthe Credit Union Prepaid Card - givingthem all of the benefits, without the heftymonthly bills, or interest that credit cardscan bring. For those people who alreadyhave a debit card, prepaid cards offer evenmore control over spending andbudgeting, 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 maybe needed in order to be approved for acredit or debit card. Prepaid cards areconvenient for large purchases too, whichis ideal for someone who can't get, ordoesn't want, a credit card. All themember needs to do is to load or top upmoney to the card at their local creditunion and use it anywhere that acceptsMastercard cards worldwide. The serviceadds to and compliments existing servicesoffered by credit unions.

The credit union prepaid card is ageneral purpose reloadable card. It servesas a budgeting tool for those looking tomanage spending, and as a mobile bankaccount for those just needing a card-

based way to spend. The card is aconvenient way to pay, safer than cash,and can be used at home or abroad. Onlyfunds loaded to the card may be spent.

Current Status The Credit Union Prepaid Card service isalready operating in two credit unions,Newington Credit Union Ltd in Belfast,who piloted the scheme, andBallinascreen Credit Union Ltd inDraperstown, who have just launched theservice. Plans are in place for others tobegin offering the service to theirmembers over the coming months. Theservice is operated by DCR Strategiesacting on behalf of Newcastle BuildingSociety.

Are your members looking for a new tool to make budgetingeasier – and these days, who isn't – or looking to wean themselvesoff credit cards, and want to deal with a financial institution theycan trust? Then the Credit Union Prepaid Card may just fit the bill.

Credit Union Prepaid Card in Northern Ireland

and over again to make payments atover 28 million merchants around theworld that accept Mastercard cards.

CostsVarious financial institutions offerprepaid cards with different features,different benefits, and a different feestructure. Some offerings charge ahigher upfront fee, and then have lowertransaction fees. Others are pay-as-you-go. The Credit Union Prepaid Cardprovides the best product, and value, formembers. Visit http://www.what-prepaid-card.co.uk to compare the Credit UnionPrepaid Card cardholder costs belowagainst those of other leading generalpre-paid card offerings in the UK.

In this cost model credit unions payfor cardholders POS purchasetransactions and get £2.50 per quarterper cardholder in return. Credit unionsare also required to pre-fund the cardsettlement account to allow cardholdersdraw on funds loaded immediately.

The ‘Investing in our Future’ researchproduced by Amarach Research inAugust 2009 highlighted that a largeproportion of the population of the islandagree that they ‘would like to use theCredit Union for more of my financialneeds’. Credit unions offering thisservice can expect to retain and enhancetheir relationship with members. This isa low cost, high value added servicewhich is affordable even for smallercredit unions.

Next stepsIf you are interested in offering thisservice or would like further information,contact Joe Timmons at the Irish Leagueof Credit Unions by telephone on +353(0)1 614 6968 or [email protected] union members should contacttheir local credit union for details.

BenefitsThe Credit Union Prepaid Card willincrease the credit union’s localprofile, member loyalty, and businesswith the credit union. The serviceadds significant value to the creditunion proposition to members andwill strongly support loan promotionsand growth, for example

Holiday Loans• Loans can be loaded to members

cards

• Reduces cheques/cashrequirements at the credit union

• Avoids need for members to go to abank to lodge a cheque or waituntil cheque is cleared

• Card can be used abroad to makepurchases

• Daily Mastercard currencyexchange rates apply -nocommission

Student Loans & Youth • All members over 16 are eligible to

obtain a card• Students can have access to loaded

funds when away from home orabroad

• Members can only spend what isloaded to their card. This helpsmembers manage a budget better

• Safer than cash• 24/7 access to balance and

transaction information via helpdeskor online. Members can also checkspending against budget

• There is a certain status associatedwith holding a payment card for youthmembers as well as the convenienceand payment options a card delivers

There are significant benefits for un-banked members• All members over 16 are eligible for

a Credit Union Prepaid Card, to givethem 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, byphone and at the till, without fear ofgetting into debt.

• Added security of not carrying cash,but still having access to your money

FeaturesCredit unions do not need anyadditional IT equipment or software tooffer the Credit Union Prepaid Cardservice as it is delivered through anInternet based card managementsystem custom built for credit unions.Broadband and online businessbanking at the credit union is requiredto deliver the service. Other importantfeatures include• Funds loaded are available for

spending immediately, no 3-dayclearing funds delay

• 24 hour Helpdesk to reportLost/Stolen cards and query accountbalance/transactions

• Cardholder services are available viawww.creditunionni.co.uk and thewebsites of credit unions offering theservice

• Cards are personalised with eachmembers name

• Cards have Chip & PIN securityrequiring a secret PIN entry to makewithdrawals. If a member’s card islost or stolen it can be blockedimmediately

• The Credit union Prepaid Card is are-loadable prepaid debit card, andmay be topped up and used over

DESCRIPTION SUMMARY

Card Issue Fee Card order - £6.25

Limits The maximum available balance shall not exceed £5,000unless specifically agreed with the member at the time ofapplicationATM withdrawal limit at any one time is £200ATM daily withdrawal limit is £400

Usage The card cannot be used at an automated fuelRestrictions 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 thecard issuer for transactions and maintenance of theservice, and will be billed on the first working day of eachquarter)

Transaction Fees Card Load - NilTransaction charges are built into the quarterly servicecharge, 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 ATM Withdrawal (UK) - £0.68Withdrawal Fees ATM Withdrawal (Outside UK) - £2.50

Surcharge ATM’s will incur a charge as set by the ATMprovider. ATM withdrawal fees are deducted from thecard balance at the time of withdrawal

Balance Online Statement/Balance Enquiry -NilEnquiries Card Services Support/Enquiries - Nil

Other Fees Chargeback Fee - (if applicable) £20.00Paper Statement Request Fee - £10.00Card Replacement - £5


Cardholders Fees


Social Media – A Strategy for Credit Unions

enhance and retain a credit union’sreputation.

Is Social Media and Social News the SameThing?It is easy to confuse social media withsocial news because we often refer tomembers of the news as "the media."Adding to the confusion is the fact that asocial news site is also a social media sitebecause it falls into that broader category.

What Are Social Media Websites?Social media is a broad term and covers awide variety of websites. The onecommon link between such websites isthat the user is able to interact with thewebsite and also with other visitors.

Here are some examples of socialmedia websites:• Social News. (Digg, Twitter, Reddit)

Interact by voting for articles andcommenting on them.

• Social Networking. (Facebook,LinkedIn) Interact by adding friends,

commenting on profiles, joining groupsand having discussions.

• Social Photo and Video Sharing.(YouTube, Flickr) Interact by sharingphotos or videos and commenting onuser submissions.

• Wikis. (Wikipedia, Wikia) Interact byadding articles and editing existingarticles.

These websites are simply examples ofsocial media websites. Any website thatinvites the user to interact with the siteand with other visitors falls into thedefinition of social media.

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 aretrying to make is easily understood.

Conclusion:The potential payoff for credit union socialmedia participation is enormous. Yourcredit union will have a better sense ofhow they are perceived by their targetaudiences, it will help to establish two waydialogue with key stakeholders andempower members to speak with them,not at them.

The purpose of social media marketingis not only to draw traffic and attention to

Some may believethat social mediasites such asFacebook or Beboare a passing fad;others are convincedthat they are here tostay. However, evenif social media isonly a temporaryphase in our lives, itis one that is far toopowerful to ignore.The reality is thateven if certainapplications gothrough a phase ofbeing the “top socialmedia presence”, theidea of social mediais here to stay. If it’snot Twitter orFacebook, new andimproved tools willbe developed andthe concept of"social media" willprevail.

Key Facebook Facts and Figures:

■ 50% of Facebook users log on in anygiven day

■ 5.5 million status updates are postedeach day

■ 2.5 billion photos are uploaded eachmonth

■ 1.6 million+ active pages onFacebook

■ The average user has 130 friends onthe site

■ On average, users spend more than55 minutes per day on Facebook

■ Over 700,000 Businesses maintainactive pages on Facebook

■ About 70% of Facebook users resideoutside of the United States

■ There are more than 180 mobileoperators in 60 countries deployingand promoting Facebook mobileproducts

■ There are over 500,000 activeapplications available on Facebook

■ 3.5 million events are created eachmonth 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

your website, it is also to promote andspread ideas among your targetaudiences. Credit unions can use socialmedia marketing to stimulate feelingsand goodwill connected to a specificevent, promotion or website.

Is it worth spending time on social mediamarketing? Success on the Internet is primarilybased on one thing; the visibility of yourwebsite. Increasing the visibility of yourwebsite using social media marketing willgive more exposure and build yourInternet identity more effectively thanjust merely advertising your website.

Will social media marketing improve yoursearch engine ranking? Absolutely. Social media marketingincreases the accessibility to your website. Linking to relevant websites or higher ranked pages will not only bring more visitors but also improve the qualityof visitors who visit your website. A socialmedia marketing strategy, when plannedcorrectly with appropriate resources, willincrease your visibility and exposure onthe internet.

Follow us on

Twitter

Facebook

Just click on the links onwww.creditunion.ie

Pictured at the relaunch of creditunion.ie are Mark Bailey, President and Kieron Brennan, CEO of the Irish League of Credit Unions

In short, social media is simply a ‘new’ way toengage with your public. A commonmisconception is that it is being used by solelythe younger demographic, when in fact; agood majority of this audience is 55+. Thetruth is that this demographic is made up ofactive users who are “looking for” news. Creditunions can use Facebook to access a largeaudience. Indeed, almost 1.5 million people inIreland have created a Facebook presence.

A different demographic are users of Twitteror write blogs. These users are primarilyengaged on the web with helping to spreadnews. They are heavier internet users, spend alot of time seeking and creating content andrequire a different message or method to grabtheir attention.

What is Social Media?The best way to define social media is to breakit down. Media is an instrument ofcommunication, like newspaper or radio, sosocial media would be a social instrument ofcommunication. Thetechnical definitionis ‘....a mediadesigned to bedisseminatedthrough socialinteraction,created usinghighly accessible

and scalable publishing techniques’.In simple terms, this would be a website that

doesn't just give you information, but interactswith you while giving you that information. Thisinteraction can be as simple as asking for yourcomments or letting you vote on an article, orit can be as complex as recommendingmovies to you based on the ratings of otherpeople with similar interests.

Think of regular media as a one-way streetwhere you can read a newspaper or listen to areport on television, but you have very limitedability to give your thoughts on the matter.Social media, on the other hand, is a two-waystreet that gives you the ability tocommunicate too.

Social media marketing is marketingthrough social media sites such as Facebook,LinkedIn, Twitter, Flickr, and YouTube. Socialmedia marketing has the ability to interactmuch more personally and dynamically thantraditional marketing.

Social media marketing is used to promoteproducts and services. It can be very effective

if it is used appropriately to boostbrand awareness and

overall visibilityon theinternet. In acredit unioncontext, itcan beused to


Average sickness absence in non profitorganisations is currently costing €836(£698) per employee per year andemployee absence costs employers 9.4working days for every member of staffper year1. When considering absencemanagement, there are a number offactors which need to be examined,which include:• What are the main causes ofabsences;• Information on managing sick leave

effectively; and• Implications of legislation on managing

absence

Identify Periods of AbsenceTo understand if your credit union hasan issue with absence, it is necessary tocollect information to identify anypatterns and to measure levels ofabsence with the following formulawhich details the percentage of total

time available which has been lost: The reasons for uncertified absenceshould be recorded for all employees, inorder to adopt an effective strategy tomanage and reduce this type ofabsence. An Absence ManagementPolicy should be developed andimplemented, which should meet thelegislative2 requirement for employers toprovide staff with information on termsand conditions which relate to incapacityfor work due to sickness or injury,including the provision for sick pay.

Managing Short-Term AbsenceEffective interventions in managingshort-term absence include:• A proactive absence management

policy;• Return to work interviews - Return to

work interviews can help identify short-term absence problems at an earlystage. They also provide managerswith an opportunity to start a dialoguewith staff over underlying issues,which may be the cause of absence;

• Disciplinary procedures forunacceptable absence levels - The useof disciplinary procedures for

unacceptable absence may be usedto make it clear to employees thatunjustified absence will not betolerated and the absence policies willbe enforced;

• Ensuring Managers and Supervisorsare trained in the processes involvedin Absence Management and theninvolved in the process;

• Providing sickness absenceinformation to line manager; and

• Involving occupational healthprofessionals when necessary.

Managing Long-Term AbsenceHaving a formal strategy in place whendealing with long-term absence willassist the credit union in gettingemployees back into the workplace aftera prolonged period of sickness or injury-related absence. The role of linemanagers is important along with thefollowing intervention strategies:• Changes to work patterns or

environment• Return to work interviews• Occupational health involvement• Restricting sick pay• Rehabilitation programmes

There are four main elements in therecovery and return-to-work process.These are as follows:1. Keep in contact with sick employees

– ensure contact is maintained on aregular basis using a sensitive andnon-intrusive approach.

2. Planning and undertaking workplacecontrols or adjustments as someobstacles may hinder an employee’sreturn to work. A risk assessmentcan identify measures or adjustmentsto help workers return and stay inwork. Examples of these mayinclude:

- Allowing a gradual return-to-work, e.g.building up from part-time to full-timeover a period of weeks;

- Changing work patterns ormanagement style to reduce pressureand give the employee more control;

3. Using professional advice andtreatment – occupational healthprofessionals should be able to play amajor role in evaluating the reasonfor absence, carrying out healthassessments, and assisting managersin planning a return to work.

4. Planning and co-ordinating a return-to-work plan. This must be agreedby the employee and the linemanager and any other staff likely tobe affected. The plan would include:

- The goals, such as modified workinghours, or a modified job role;

- The time period;

Managing absence in the workplace is vital, not only formeeting the business needs of the credit union but alsofor staff morale and commitment. Preventative measuresshould be looked at in tandem with absence to activelyencourage good attendance with positive measures, topromote employee wellbeing and the provision of suitableworking arrangements.

Absence management

Total absence (hours or days)in the period x 100

_________________________

Possible total (hours or days)in the period

EU Microfinance Fund

Earlier this year, details wereannounced of a new European loanscheme/ microfinance fund that isbeing launched by the EuropeanUnion. The European ProgressMicrofinance Facility for Employmentand Social Inclusion (EPMF) as it hasnow been named will make €100million available over a four-yearperiod across the 27 EU memberstates. The facility will be specificallytargeted at newly unemployed peoplein need of loans to start their ownbusinesses. Up to €25,000 will bemade available in the form of loansand credit guarantees from theEuropean Union.

The move is designed to helppeople who have lost their jobs, thosewho wish to start a small business,and people who have difficultysecuring finance from traditionalbanking sources. Micro-enterprisesare defined by the EU as businessesemploying fewer than 10 people andaccording to EU data theseenterprises make up around 91% ofall European businesses.

Key points on the MicrofinanceFacility • Objectives: The aim of the Facility is

to increase the access to, andavailability of microfinance to asufficient scale and within areasonable time-frame. Microcredit

is defined as productive loans (i.e.loans that generate business andcontribute to growth andemployment) below €25,000.

• Target groups: People who have losttheir jobs (or are at risk of losingtheir jobs) and those who aredisadvantaged with regards toaccessing the commercial creditmarket are the main target groupsof the Facility. In addition,entrepreneurs of micro-business(less than 10 employed people;annual balance sheet is below €2million), self-employed and thesocial economy should benefit fromthe initiative.

• Conditions for accessing theFacility: The microfinance providersshall closely cooperate withorganisations engaged inrepresenting the interests of thefinal beneficiaries of microcredit toensure that they receive mentoring,training, etc. The microfinanceproviders also have to comply withresponsible lending principles andseek to prevent over-indebtednessof the borrower.

• Management of the Facility: TheFacility will be managed jointly bythe European Investment Bank(EIB) and the European InvestmentFund (EIF).

• Available budget: €100million (this isacross all 27 EU member states).

Credit Unions and applications to theMicrofinance FundThe Microfinance fund applicationprocess will be administered by theEuropean Investment Fund (EIF). TheEIF which is owned by the EuropeanInvestment Bank has administerednumerous similar schemes in the paston behalf of the EuropeanUnion/European Investment Bank.The EIF has informed the Irish Leagueof Credit Unions (ILCU) that theprecise details of the applicationprocess, contact details forapplications etc. are now available ontheir website www.eif.orgThe ILCU has held discussions withthe EIF in terms of credit unionsapplying to the facility. The EIF haveoutlined that the application/selectionprocess will work as follows:• Initial call for expressions of interest

and application form published onthe EIF website

• The proposals will be examined bythe EIF in chronological order ofreceipt using best businesspractices.

• Satisfactory applications will befollowed up with due diligence visits

• Once the due diligence has beencompleted the proposals may thenbe approved by the EIF Board andthe European Union

• Signature of the agreement betweenthe EIF and the lending institution

The EIF have made it clear to the ILCUthat due to limited resources they willonly be in a position to conduct one (orat most two) due diligence processesfor credit unions in Ireland. The EIFtherefore have advised that creditunions in Ireland that wish to apply tothe facility should do so in a co-ordinated fashion through theirrepresentative body i.e. ILCU.

Credit unions who wish to discussthis facility further or who intend tomake an application should contactJohn Knox [email protected] in theResearch & Development Departmentof the Irish League of Credit Unions.


Term Covers defaults which occur within 3years from the signature of theguaranteed loan agreement

Guarantee Rate Up to 75% of Micro-creditloan/guarantee

Guarantee Fee Other than a Commitment Fee, if any, noguarantee fee shall be charged

Commitment Fee Charged to the Intermediary if theportfolio does not reach at least 90% ofthe Agreed Volume within theAvailability Period

Agreed Volume Target volume the intermediary shallattain within the Availability Period

Availability Period Up to 24 months

Main Features of the Micro-Credit Guarantee

- A statement about the new workingarrangements; and

- Review date

Disability DiscriminationWhen managing long-term absence anddismissal, it is important to be aware ofdisability discrimination claims. If anemployee is dismissed on the basis oftheir disability, they could bring a claimto the Equality Tribunal because theywere treated differently on the basis oftheir disability, as this is one of theprotected grounds under EmploymentEquality Acts. An employer must notdismiss an employee on the basis oftheir disability3. Employers are obligedby legislation to make “reasonableprovisions” for employees who becomedisabled4 as a result of sickness. Theemployer must prove that, followingattempts to reasonably accommodatethe employee, they remained unable towork and that due to the business needsof the credit union, the employer had nooption but to dismiss the employee. Thedecision to dismiss an employee canonly be made following an up-to-datemedical assessment with anoccupational health specialist and onlyafter fair procedures have been followed,i.e. meeting with the employee todiscuss the matter and informing themthat dismissal is being considered andproviding them with an opportunity torespond.

Frequently Asked QuestionsScenario 1Employee A has a history of sporadic sickleave, which is both certified anduncertified. Management have never

approached the employee to discusstheir absence issue and there are noabsence management procedures inplace. Should the credit union disciplinethe employee?The credit union should implement anabsence management policy and informall employees that all sick leave will bemonitored going forward and that returnto work interviews will take placefollowing any period of absence. Thecredit union should document theabsence history of all employees andconduct meetings to discussunacceptable levels of absence and toexamine if any underlying reasons existfor the absence. Once these steps havebeen taken, the use of disciplinaryprocedures for unacceptable absencemay be used to make it clear toemployees that unjustified absence willnot be tolerated and the absencepolicies will be enforced.The agreed process should be followedconsistently for all employees, not justthe employee with the absence issue.

Scenario 2Employee B has a history of certified sickleave and has informed the credit unionof their medical condition. What shouldthe credit union do? The credit union should meet with theemployee to discuss their medicalcondition as they have a duty of care forthe health and safety of employeeswithin the workplace. It may benecessary to send the employee for anindependent medical assessment toidentify if there are any actions the creditunion must take in accommodating theemployee within the workplace. The

credit union can only send theemployee for an independent medicalwith the credit union doctor if this rightis expressed in the contract ofemployment and/or the sick leave policyof the credit union. The independentmedical assessment should beundertaken by an occupational healthspecialist if the credit union doctor isnot suitably qualified for the requiredassessment. The credit union doctor oroccupational health specialist should beprovided with any factual informationabout the employee’s absence to datealong with relevant informationpertaining to the employees workingconditions and a copy of their jobdescription. The purpose of thisexercise is to examine if the credit unionshould provide any reasonableadjustments to accommodate theemployee as a result of their medicalcondition or possible disability.

Scenario 3Employee C is on certified sick leave forstress for a period of 4 months. Anindependent medical assessment hasrecommended that the employee attendcounselling sessions and that they arephysically fit to return back to work.What should the credit union do?The credit union should organise ameeting with the employee to discussthe findings of the independent medicalassessment and possible ways ofreasonably accommodating theemployees return to work. It would beadvisable that the credit union facilitatethe counselling sessions and agree withthe employee arrangements for theirreturn to work. If the stress is workrelated, the employer is obliged toinvestigate both the reasons andsuitable interventions strategies tofacilitate the employees return.

Absence Management Procedures andSick Pay Policies are available todownload from the ILCU websitewww.creditunion.ie

For further information or to discuss anyof the above, please contact the HRDepartment.

1 CIPD – Annual Survey Report, AbsenceManagement, 2009.

2 Employment Rights (Northern Ireland) Order1996; and Terms of Employment (Information)Act, 1994 and 2001.

3 The Disability Discrimination Act 1995 (asamended) for Northern Ireland and theEmployment Equality Acts, 1998-2008 for theRepublic of Ireland.

4 Ibid

INNOVATION The impact of Bishopstown’s innovationhas not gone unnoticed by the country atlarge. With coverage in local and nationalnewspapers and radio stations alike, andalso television coverage in the form of RTENews, Bishopstown Credit Union hascertainly made the headlines recently.Local recognition came in the form of areception which was held by the LordMayor of Cork. However, the bestrecognition came from members, who havemade the move and are now seeing thebenefits of the improved services.

This modern approach to existingservices has involved dedication from theBoard of Directors and staff alike. RayKenny, CEO, Bishopstown Credit Union,explains why they improved their services,“We improved our offering for ourmembers. Following a survey of our

members, we discovered they were lookingfor a credit union that met their needs andthis was not happening. Members viewedonline access to accounts as a minimumrequirement for any financial institution.As members wanted improved services, wemoved to develop our existing offering.”

Indeed, the survey conducted byBishopstown Credit Union highlighted theneed for the credit union to evolve to meetthe needs of the community and to ensurethat the younger members wereencouraged to join, to assist the continuedexistence of the credit union. Theresearch findings were corroboratedfurther with the ILCU’s Research Reportentitled ‘Investing in our Future’ which waspublished in August 2009. The Research,conducted by Amarach, stated that 63% ofmembers in the Republic of Ireland areinterested in a Debit card from their local

credit union and that 50% of members areinterested in online facilities. It is clearfrom the recent research that membersand non-members alike would like to usecredit unions for more of their financialneeds and Bishopstown Credit Union hasrealised this.

Bishopstown Credit Union spent anumber of years researching the market,in an effort to find the best improvementspossible. Looking back on the research,Ray Kenny agrees that it appeareddaunting at the time but that it has beenworth it, “We have received international,national and local recognition, which isvery encouraging. However, the pinnacleof these accolades has come through themembers’ praise of the improved serviceswhich allows them the flexibility to utiliseBishopstown Credit Union to support theirpersonal finance needs. That proves to usthat, we have taken the right step, for ourmembers.”

One of the largest community-basedcredit unions in Ireland, BishopstownCredit Union is looking towards the futureand their future looks bright. BishopstownCredit Union’s foundation as a cornerstoneof the community has been reinforcedthrough this rejuvenation and it iscertainly a credit union worth watching.


YOUTH DEVELOPMENT: WHAT’S NEW ATBISHOPSTOWN CU?

• SOCIAL NETWORKINGBishopstown Credit Union set up a socialnetworking presence to communicate withthe CIT and UCC students, as they arewithin the common bond. With changingtechnology and changing memberrequirements comes opportunities and thishas been recognised by BishopstownCredit Union and their online presencethrough Facebook and Twitter.

• SECOND LEVEL THINK-TANKYouth are the future of the credit unionmovement at large and their requirementsshould be looked at. As part of the youthdevelopment focus of Bishopstown CreditUnion, second-level schools in the areahave been contacted for their opinionsand ideas on how they would like to seetheir credit union run. The second-levelstudents believed that credit unions werefocused on the older generations but thatthe DEBIT card would change thatperception, in time.

Focus on …Bishopstown Credit Union Limited

Bishopstown Credit Union Limited is inexistence for over 40 years but nobodycould accuse them of resting on theirlaurels. While members enjoy the samefriendly service they have come to expectfrom Bishopstown Credit Union, they alsoenjoy membership of an innovative creditunion. They haven’t changed the service –they have merely improved it. An enhancedservice has ensured that they are offeringtwenty-first century service, with a creditunion ethos.

SERVICES PROVIDEDMotivated by the co-operative principle ofpeople helping people, Bishopstown CreditUnion has looked at the services on offerand ways to improve them. Following asurvey of members, it was identified thatthey wanted their credit union to evolvewith service improvements. The Board andManagement at Bishopstown Credit Unionlistened to the members and as a result the3 main improvements implemented were:sort code, debit card and online access toaccounts

Members can now receive all types ofpayments electronically into theirBishopstown Credit Union account through

the sort code (99-10-12) and their unique8-digit LINK account number. FromChildren’s Allowance to wages to pensions,Bishopstown Credit Union is receivingfunds for members, from variousorganisations. Members can also makepayments from their account (e.g. rent,mortgage, utility bills etc.). This is allfacilitated through the sort code and by thenew technology provided by our Canadianpartners.

Although Bishopstown Credit Union iscommunity-based, it has a global reachwith the DEBIT card which can be used inover 26 million locations worldwide. ThisDEBIT card is an enhanced version of theprevious ATM card and is available to alladult members. It works online, in-storeand at ATMs, making it the card that meetsall your needs. The Bishopstown CreditUnion debit card is the only free cardavailable in Ireland that allows people bookflights online with Ryanair, without payingthe booking fee.

The newly revised website(www.bishopstowncu.ie) allows membersto view their accounts and transfer funds.This service allows members to keep aneye on their funds and manage their money.

KEY FIGURES:

Membership 23,581Staff (incl. Voluntary & Part-time staff): 38Loans: €58.7mSavings: €115.4m

20 :: CU FOCUS AUTUMN 2010

That was one finding of a 10-year reviewconducted by the Credit Union NationalAssociation’s (CUNA) Small Credit UnionCommittee.

The economic landscape has changeddramatically since CUNA publishedfindings of its Small Credit Union TaskForce in 1999. Today, most small creditunions offer a wide range of services, andoperating expense ratios vary little acrosscredit union asset size groups.

According to CUNA’s Small CreditUnion Committee, small credit unions’overriding challenges now include:

1. Regulatory burden. This is widelyregarded as small credit unions’ No. 1concern. Today, more than 25% of U.S.credit unions are operated by three orfewer full-time equivalent employees, andmore than 1,000 credit unions areoperated by one or fewer full-timeequivalents.

The crush of post-crisis regulatoryinitiatives and the constant drumbeat ofchanges to existing regulationssignificantly hamper credit unionemployees’ effectiveness.

While policymakers discuss thetheoretical issue of institutions that are“too big to fail,” small credit unions worrythat policymakers see them as “too smallto save.”

2. Back-office redundancies and lack ofcollaboration. Substantial increases inoperating expense ratios moderated in2009 as savings inflows dramatically

increased. Nevertheless, small creditunions recognize that this reversal is likelyto be short-lived.

Small credit union survival hinges onthe ability to spend more time interactingwith members and less time mired innoncore tasks such as payroll, accountingsystem management, and dataprocessing.

3. Succession planning. This challengehas less to do with the succession-planning process and more to do with theincreasingly difficult task of findingqualified people willing to work long hoursfor relatively low pay. The difficulty infinding qualified directors willing to acceptthe growing risk of oversight responsibilitymagnifies this challenge.

4. Corporate credit union issues. Smallcredit unions are apprehensive about theirability to bear the significant costsassociated with corporate credit unionstabilisation. And they’re concerned aboutthe National Credit Union Administration’swillingness to do everything in its power toavoid permanent depletion of corporatecapital.

What's the solution?The Committee didn’t find any “silverbullet” solutions that will magicallyaddress problems small credit unionsface. However, it did identify actions that,if taken by various levels of the creditunion movement, will help small creditunions thrive and grow:

1. Share the burden. The responsibility forassisting smaller credit unions doesn’t restwith any single element of the movement.All must be involved.

2. Expand and streamline outsourcing foreconomies of scale. One way for smallcredit unions to increase efficiency is topurchase operational services from largerfirms that enjoy economies of scale.

These larger firms could be other creditunions or vendors. Services that can beoutsourced for greater efficiency includedata processing, credit card processing,share draft processing, loan centers, callcenters, collections, shared branches,Web site development and maintenance,etc.

In addition, system entities should seekways to educate, support, and otherwisehelp small credit unions establish creditunion service organizations (CUSO).There’s value in the collaborative services

CUSOs provide, which could be asignificant contributor to future success.

Established CUSOs are likely to expandthrough collaboration to providecompliance officers, audits, and otherservices that small credit unions now payfor on a piecemeal basis without thepower of scale to negotiate pricing.

3. Encourage larger credit unions to assistsmall credit unions. Large credit unionscan help small credit unions withmentoring programmes, donations ofused equipment, fill-in staff for vacationsand training, access to large-volumepurchases, and assistance with marketingand planning. Local and state-levelorganisations should help facilitate suchefforts.

However, large credit unions should besensitive to small credit unions’ needswhen offering such assistance. Smallcredit unions may be suspicious of suchoffers, believing them to be the initialsteps of a merger investigation.

4. Form peer networks. Small credit unionsshould routinely meet with local peers andoperate e-mail support groups. Often, thebest source of advice to deal with an issueis a similar-sized credit union that hasalready dealt with the same problem.

5. Exploit group buying opportunities toreduce per-unit costs.

6. Promote small credit union pricediscounts.

7. Produce basic operations, policy, andcompliance manuals for small creditunions. These could be joint projects ofsmall credit unions and state and nationalorganisations, and could be madeavailable and updated on the Internet.

8. Provide low-cost hardware and softwareto small credit unions.

9. Examine shared branching. Explore thefeasibility of small credit unions makingtheir locations available to each other’smembers for basic counter transactions toincrease accessibility and encouragemembership growth.

10. Preserve charters wherever possible.When merger is deemed unavoidable,encourage small credit unions to joinsimilar institutions to preserve uniquenessand provide growth opportunities to othersmall credit unions.


Small CUs in the US:

Top Challenges Yesterday & Today

Why Support Small CUs?• Political strength and unity. As

not-for-profit, democraticallycontrolled financial servicescooperatives, credit unions enjoya special, legislatively mandatedrole. The existence of viable,healthy small credit unions isvital to the continued politicalstrength of the credit unionmovement.

• Members like them. There arenearly 13 million members incredit unions with assets of lessthan $35 million.

• They provide choice. Smallcredit unions offer uniquefeatures, including the sense ofbelonging to a small, closelydefined group, volunteeropportunities, and more accessto management and the board.

• Philosophical roots. Manybelieve small credit unionsexemplify credit unionphilosophy in action.

• They’re the source of all creditunions. All credit unions startedout small. And more 400 creditunions that started 2006 as“small” institutions (less than$35 million in assets) outgrewthe classification by mid-year2009.

• Democratic models. Small creditunions provide opportunities tovolunteer and participate indemocratic governance. Thereare more than 55,000 volunteersin credit unions with less than$35 million in assets.

• They preserve credit unioncharters. It’s difficult to start up anew credit union, so extremecare should be taken to preservecredit unions already inoperation.

• Diversification. Concentrating allcredit union resources in a fewinstitutions would produce asystem that’s less robust andable to adjust to a changingworld. Diversification also makesthe credit union movement lesssusceptible to financial andother risks.

Reprinted with kind permissionfrom Credit Union Magazinewww.creditunionmagazine.com

Ten years ago, the biggest challenge facing smallcredit unions was the need to offer a wider range ofservices. Today, that concern isn’t on the radar formost small credit unions, those with assets of $35million or less, which make up 70% of the nation’s8,000 credit unions (half have less than $16 millionin assets).


ILCUFOUNDATION

ILCUFOUNDATION

An interview conducted with Svetlana Amosova, Chairperson of the Credit UnionAssociation of Karelia and Manager of Althea Credit Union, Karelia, Russia.

Russia is a huge country; it is the largeston earth in terms of surface areaspanning 10 time zones. It is thereforeone of the ILCU InternationalDevelopment Foundation Limited’s(ILCUF) most challenging areas in termsof credit union development. Theinequalities in society are still blatantand the divide between rich and poor isincreasingly evident.

The ILCUF continues to focus itseffort on strengthening the regionalpresence of credit unions. Currently theILCUF is supporting the development ofregional associations in the following

three areas of Russia: • St. Petersburg • Karelia (North-west region of Russia) • Dubna (Moscow region).

The ILCUF is assisting these regionalassociations to support new andemerging credit unions with technicaland operational support.

Q. Could you tell us a little about Russiaand its history (comparing it to Ireland).Russia is a great country with very oldtraditions and lots of culture. TheRussian people suffered a lot of

hardship during different wars andrevolutions and during the totalitarianregime. Losing relatives and friends andsuffering from hunger were all difficulttimes for the people of Russia. However,challenges make a person stronger andcloser to each other, perhaps that is whyRussian people feel that they have anaffinity with Irish people in many ways.

Q. Could you tell us a little about yourself,your family, hobbies and interests.I was born in a small city, and I havealways been involved in community work.After graduating from University, I

participated in different youthorganisations. For almost 15 years Iworked in medicine, helping seriouslyill children. In order to do that, I hadto get a second undergraduateeducation. I am married with twodaughters, the eldest daughter –Anastasiya, followed in her father'ssteps and is currently working in alarge law firm in St.Petersburg , theyoungest – Daria, received ascholarship and is currently doing herMasters in one of the top businessschools in Belgium. Both daughtersare fluent in English, they have helpedme a lot in communicating with Irishcolleagues.

Q. What are the key challenges thatRussian credit unions face?The key challenges lie in the legalenvironment. For a long time there wasno adequate law and strictgovernmental control, this led to theestablishment of dishonest and badlyrun credit unions, and a weakening ofthe positive image of credit unions.Even nowadays, most credit unionsface great challenges: trying to operateaccording to the recently passed law(on credit cooperatives) andovercoming the effects of the financialcrisis.

Q. Are there any particular products orservices which you would like to seedeveloped as a priority during yourterm?I would like to develop those productsand services which members need themost: long-term loans, more diversesavings programmes, including thosefor children, young people, insuranceand consulting services (for example,how to manage the family budget).

Q. Do Russian credit unions offermembers credit, debit and ATM cards? No. The use of such technologiesrequires large investment, only verylarge financial organisations would usethis technology.

Q. What is the typical credit union inRussia like? What would Russian creditunions like to offer that they currentlydo not?A typical Russian credit union has

existed for a little over 5 years, hasabout 1,000 members, and offers itsmember’s loans and savings facilities.Not all credit unions offer insuranceservices, and we are still dreamingabout credit cards and online banking.

Q. What would be the amount of theaverage credit union loan in 2009?76,000 Rubles (1,700 Euro).

Q.How has the ILCUF helped Russiancredit unions?The ILCUF helped in the rebirth of theRussian Credit Union movement. InNovember 1994, the Russian Leagueof Credit Unions was set up for thepurpose of coordinating programmesof foreign technical and financialsupport. In the Russian League therewere representatives of WOCCU,Australian Association of credit unions,ILCUF, Desjardins. I was very lucky toparticipate in the first study trip toIreland, almost every person who wentwith me is now the head of a big creditunion or regional association inRussia.

In 2000, the ILCUF Board took adecision to support three Russianregions – Karelia, Saint-Petersburg andDubna (Moscow Oblast). For 10 yearsthe regional associations have beenforming: infrastructure of support andservices for credit unions. NowadaysIrish credit unions are helping us inachieving goals of increasing theservice quality in credit unions andultimately to become self-sufficient.

Q. How useful have visits been toIreland, particularly visits to Irish creditunions?The experience of our Irish colleaguesis so diverse and interesting. The Irishcredit union movement has a stronglegislation base, uses moderntechnologies, and offers a variety ofservices for members. Severalgenerations were brought up in creditunions, they are professionals, andthey know how to manage their creditunion. Our Irish colleagues alwaysgenerously share their experience.They are very kind when hostingdelegations from Russia. More than100 specialists from Russian creditunions undertook studies in the ILCUF

during 2001 – 2009. The participants of thestudy tours to Ireland always recall the creditunions and the people who live and workthere with warmth. When they come back toRussia they begin to work with enthusiasmin implementing the knowledge gained fromthe Irish experience to their own creditunions.

Q. How have credit unions helped women inRussia and are they well represented on theboard of directors?More than 75% of members in credit unionsare women. Women are usually very activelyinvolved and that is why not less than 80%of the Board is represented by women.

Q. How have credit unions in Russia helpedpeople understand benefits of democracy etc?Democracy, in my opinion, is not only aboutequal abilities and possibilities, first of all,democracy is the responsibility for makingdecisions and taking actions. Credit unionscan be an excellent place for its members torealize such studies through attractingpeople in the volunteer work of electedbodies and though the education ofvolunteers.

Q.What are the main reasons for peopletaking loans from credit unions in Russia?Loans are usually taken for purchasing orrepairing houses, for purchasingautomobiles, domestic-machines, travelling,medical expenses and education.

Q.From your knowledge of credit unionmembers what is the biggest benefit of them?When we interview our members theyusually say that they are attracted by- Available loans;- Interest rates for savings;- Capability to get financial advice.

The ILCU International DevelopmentFoundation Limited is supporting the long-term development of credit unions inAlbania, Russia, The Gambia, Ethiopia,Ghana and Sierra Leone and assistingsmall development projects worldwide.This valuable work is possible thanks to thegenerous support of Irish credit unions.

For further information on the work of theFoundation please visit our website atwww.creditunion.ie/foundations/ or contactÁine O’Dowd on +353 1 6146746 or byemail at [email protected].

Foundation

The Russian Credit Union Movement

Svetlana Amosova – Chairwomanof the Association of Credit Unionsof Karelia addressing the board ofdirectors of the Association

The date of September 30 looms for all credit unions in Ireland andwith ever increasing regulatory requirements as well as thecompulsory year end reports, it is certainly a busy time for all. It hasnever been more important for credit unions to have instant accessto key information which affects the performance of the creditunion, in a manner which is easy to understand and interpret.

Phase one of ILCUbis, the credit union business intelligenceservice, was launched at the League AGM in Limerick. In simpleterms, ILCUbis enables credit unions to:• View selected areas of the credit unions operation in graphical

format

• Examine the credit union’s performance in comparison to groupsof 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 andannual returns as well as monthly information uploaded by thecredit union to generate a suite of reports based on the creditunion’s operation and performance.


With two sub-offices suffering fromconnection speed issues, Thurles CreditUnion was quick out of the blocks inexpressing their interest in connectingto ILCUnet, the secure credit unioncomputer network. The credit unionhave been experiencing some issueswith their leased line connections to twosub-offices in Urlingford and Killenaule.Although the credit union were payingsignificant fees for a 12MB connectionvia their broadband supplier, in practicethey were only receiving a 1MBconnection. This was leading to issuesin the Urlingford office, as tellers werehaving difficulties in processingtransactions back to the main office.Despite raising this issue with theirbroadband supplier on a number ofoccasions, there seemed to be little thatcould be done to solve this problem.

After contacting the ICT office in theLeague, a site survey was arranged withInterfusion to determine the costs ofconnecting to ILCUnet. Cathal Bradyfrom Interfusion visited the credit unionto determine the current connectionoptions used by the credit union, thespeeds being obtained and the costs ofproviding a similar connection via

ILCUnet. Within a couple of hours, thesite survey was complete and acomprehensive report was provided toThurles CU shortly afterwards.

According to Donal Scannell, CEO ofThurles Credit Union;

“The results of the site survey werevery satisfying for us. The site surveyoutlined that by connecting to ILCUnet,we could continue to receive the sameservices from our current suppliers,experience increased connectionspeeds to our sub-offices and also seesignificant savings by cancelling theleased lines we had been using”.

Once contracts were signed,Interfusion arranged to switch the creditunion over to ILCUnet on a Wednesday,as the credit union was closed. Thecredit union’s hardware supplier, NSSL,was also present on the day to carry outthe necessary configuration changes.The changeover was seamless andcompleted later that afternoon.

The results of the changeover wereimmediately apparent with theconnection speeds to the sub officesincreasing. According to Donal:

“We’re obviously delighted with thesignificant savings to our broadband

costs which we are experiencing.However, the safety, security and speedprovided by the network to us are moreimportant. Connection speeds to our sub-office are now four times faster and thishas eliminated the transaction processingissues which we had been facing. Thelevel of security provided by using adedicated credit union network is alsoreassuring”.

Donal found the switch over to bestraight forward and uncomplicated.

“Interfusion was great to deal with fromthe outset. There was no hard-sell andeverything was explained to us in a non-technical manner. We found thecompany very easy to work with”.

And his advice for other credit unions?“Our experiences with connecting to

the network have been extremelypositive. Credit unions have paid to buildour own communications network andshould now take pride in connecting to it”.

For more information on ILCUnet or toarrange a site survey for your credit union, please contact Malcolm Moir,Network Services Manager in the ICToffice on +353-1-614-6911 or [email protected].

ILCUbis, the credit unionbusiness intelligence service

ILCUnet, the secure creditunion computer networkCase Study on: Thurles Credit Union Limited


Income Actual Income Forecast Expenditure Actual Expenditure Forecast

1,500,000

1,200,000

900,000

600,000

300,000

APR-10 MAY-10 JUN-10 JUL-10 AUG-10 SEP-100

Income and Expense TrendProvides view and forecasting of closing surplus/deficit at financial year end (September 30th)

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:

This report, looks at the credit union’s income andexpenditure trends, and determines the credit union’s yearend position. It then calculates the surplus or deficit as thetrend continues. This will allow your credit union to determineits financial position at year end and will help establish thepossible level of dividend which can be earmarked if the trendcontinues. It also gives you the ability to make adjustments onyour income and expenses, so you can see the affect on yoursurplus at year end.

Forecast Financial Year EndPrediction of result on September 30th:

Date Income Expense Surplus/Deficit

SEP-10 1,390,520 505,595 884,925

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 loansin 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.

APR-10

BALANCE_OVER_53BALANCE_27_39BALANCE_10_18

BALANCE_40_52BALANCE_19_26BALANCE_0_9

2,500,000

Bala

nce

Am

ount

2,000,000

1,500,000

1,000,000

500,000

0 MAY-10 JUN-10

Balance At RiskDifference Between Net Loan Values and Provisions

Total Arrears Analysis

Total Net to Gross Loans

APR-10 MAY-10 JUN-10

Total Gross Loans% Total Provisions to Net Loans

Total Attached Savings

6,000,000 80

60

40

20

0

Tota

l Gro

ss L

oans

, Tot

al A

tach

ed S

avin

gs

% T

otal

Net

to G

ross

Loa

ns,

% T

otal

Pro

visi

ons

to N

et L

oans4,500,000

3,000,000

1,500,000

0

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 yourpeers by asset or membership size.

CONTACT USThose were just some simple examples or how ILCUbis can help you during this busy period. If you would like moreinformation on ILCUbis - Credit Union Business Intelligence Service or are interested in placing an order, please contactCarmel Carroll, Business Intelligence Services Manager in the ICT office on +353 1 614 6775 or [email protected]

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 thecredit union’s performance is positive compared to credit unions of a similar asset band and membership size average.

Preparing for Year End with ILCUbis

A1 Gr.Loan Arrears 10 Wks +/Tot Loans0.0

10.0

20.0

Legend Key

Asset Band Average

Credit Union Average

Membership Size Band Average


1. What is CPD?CPD stands for continuing professionaldevelopment. A CPD regime operates onthe basis of an individual being awardedCPD hours whenever they complete aformal training activity. These awardedhours will then be tracked and offsetagainst a person’s required CPD hoursfor the year.

2. What are the CPD requirements?Professional qualifications will often haveCPD requirements attached to them. Forthose who hold the Qualified FinancialAdvisor (QFA), Credit Union Advisor(CUA) or Advanced Certificate in CreditUnion Practice (ACCUP) qualificationand for those who are grandfathered,CPD requirements are basically 15hours formal training per annum. AllCPD activity must be completed in thecalendar year, i.e., 1 January–31December.

CPD needs to be widely spread toensure that knowledge is spread acrossa range of topics. Consequently, themaximum number of hours that will beawarded for any single day is 8 hours,while the maximum number of hoursthat will be awarded for any single topicwithin a day is 4 hours. The minimumunit of CPD that will be recognised ishalf an hour.

3. Who must get a qualification and do CPD?

At present only those offering advice oninsurance products are required to holda qualification with a CPD requirement.However, the financial regulator has

indicated that they intend to extend thisrequirement to those credit unionpersonnel who also offer credit unioncore products, i.e. savings and loans.Therefore at this time, most credit unionstaff (and those volunteers who work inan operational capacity or on creditcommittees) in the Republic of Irelandwould fall within a mandatoryqualification and CPD regime.

At present no such scheme exists forNorthern Ireland staff, however bestpractice and regulatory developmentswould suggest that this situation mayalso change in the near future and theILCU would strongly recommend thatNorthern Ireland staff sign up to aqualification with a relevant CPDscheme.

4. What are my CPD requirements if Idon’t have a member-facing role?

At present none, however the ILCUrecommends that all credit unionpersonnel take the opportunity to meetbest practice standards in becomingqualified and taking ongoing CPD,including those in Northern Irelandcredit unions who are not currentlycovered by any MCR regime.

Credit union volunteers should also beaware that the requirement for relevantqualifications is an important element ofboth the ROI Regulator’s Fitness &Probity Regime and the UK Regulator’sApproved Persons Regime, both ofwhich are likely to be rolled out to creditunions in the near future.

Participation in CPD will help toenhance volunteer skills and knowledge

and will give the credit union the benefitof that knowledge and understanding inthe decisions that it makes.

5. What is formal CPD?Formal CPD can be defined asattendance at professional meetings orcourses or other events of equivalentstanding where, in the opinion of theadministrator, the subject matter relatesto a professional or technical area thatis relevant to the professionaldevelopment of the individual. FormalCPD generally involves ‘active’participation in a relevant activity (e.g.attendance at seminars, workshops, in-house training programmes, approvedonline courses, etc).

6. Where can I get CPD hours?CPD hours can be gained byparticipating in paid and unpaid eventsrun by the ILCU and external bodiesand through relevant internal trainingorganised by the credit union. This caninclude:• Current ILCU open-schedule and in-

house training courses indicated asoffering CPD credits.

• Relevant CPD seminars/roadshowsrun countrywide by the ILCU (whichwill be advertised through circulationsthroughout the year).

• Web-based relevant e-learningcourses being developed and whichcan be accessed via www.cucpd.ie

• Relevant CPD activities or eventsrecognised by other providers,subject to approval by ILCU.

7. How are CPD hours monitored?It is the individual’s responsibility to keepa record of all CPD undertaken. Forthose who sign up to CU CPD you willneed to make an annual return by 31January each year, i.e. a formaldeclaration of the formal hourscompleted in the previous CPD year.(Note: all CPD activity must becompleted in a calendar year, i.e. by 31December.)

Signing up to a CPD scheme such asCU CPD will greatly aid you inmaintaining your CPD and meeting yourregulatory requirements as CU CPD willautomatically track and monitor yourCPD requirements as well as providingaccess to CPD events.

8. When will I have to make my firstreturn of CPD hours?

You will be asked to complete and returnby 31 January of each year a personalrecord of CPD undertaken in theprevious year. (The first return being dueon January 31st 2011).

9. What happens if I do not meet myannual CPD requirements or do not makean annual return?Any individual who fails to complete therequired CPD hours in a given year hasa chance to make up the shortfall by theend of the following year. This graceperiod will only be given once in any fouryear period. Failure to comply with anyof the CPD requirements may ultimatelyresult in the removal of your CPDdesignation or grandfathering status. You

should note that maintaining yourdesignation or grandfathering status is arequirement to meet the MCR specifiedby the Financial Regulator. Should youlose your CPD designation, you mightnot, therefore, be in a position to adviseor sell certain credit union financialproducts.

10. What happens if I have already lostmy CPD or grandfathering status?

Any individual who has lost their CPDstatus will be asked to make up theshortfall for the previous year and inaddition may be asked to completepenalty CPD to become reinstated.Reinstatement can only be offered onceto 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 firstto be an anti money laundering coursetailored specifically for credit unionswith additional credit union specifictitles to be developed and delivered inthe coming months.

• Free automatic tracking of ILCUdelivered CPD to aid you in meetingyour annual CPD record keepingrequirements. This will include regularupdates and reminders regarding CPDhours attained and upcoming CPDevents.

• All participants who join CU CPD willimmediately enjoy discounted rates of20% for all CPD training run by ILCUTraining (an average saving of €30per course taken).

• Automatic allocation of CPD hours tomany current ILCU events, including roadshows and relevant chapter events.

• Monitoring of your CPD requirements tohelp meet your and your credit union’sregulatory requirements.

12. How much does CU CPD Cost?CU CPD has been developed specifically forcredit unions and as such is the only creditunion focused CPD scheme available tocredit union personnel. Registration for thescheme costs €100 per CPD member perannum and this fee will be used to securethe services of speakers for upcoming CPDseminars, to develop new classroom basedand online CPD courses and to administerthe system. Note: Those who sign up beforeOctober 31st this year will be covered forthis year and all of 2011.

13. How do I sign up for CU CPD?Register using the form available from ILCUon www.creditunion.ie/training or registeronline at www.cucpd.ie , orwww.cucpd.co.uk

More Information:For more information relating to any of theissues dealt with in this article, pleasecontact the ILCU Training Department at:

E-mail: [email protected]: +353 1 614 6964Post: ILCU, 33-41 Lower Mount Street,

Dublin 2Web: www.creditunion.ie/training

To sign up to CU CPD visit www.cucpd.ie orwww.cucpd.co.uk

training

CU Continuing ProfessionalDevelopment (CPD) –Your questions answered! The ongoing training and up-skilling of all credit union personnelhas always been key to the success of the entire credit unionmovement and the ILCU’s new CU CPD scheme provides all creditunion personnel with a means to help maintain their knowledgeand meet best practice standards within our industry.

In the months since the credit unionlaunched this service, they haveassisted over 20 families. There is nocharge for this service unless postagecosts are incurred.

The aim of the service is to enablemembers to pay off their debts at anaffordable rate, ensuring that all oftheir essential requirements (food,home insurance, car tax, carinsurance, fuel etc.) are provided for,while at the same time cultivating ahabit of saving for periods of expenseduring the year.

The credit union’s Money Advisormeets with members by appointmentand discusses their problems withoutjudgment. The Advisor goes throughthe member’s cash flow situation andhousehold budget and gives advice on

how to bring their situation undercontrol. It is not important how orwhy people get into difficulties - whatis important is to deal with thesituation as it is now.

The credit union do not negotiateon a member’s behalf with creditors,but advise them of possiblereductions that may be negotiated,and a practical amount that they canafford to offer. A key feature of theservice is a Special Budget Accountscheme opened alongside their CreditUnion Account.

At the initial meeting a Cash flowSpreadsheet is completed. Thisoutlines income / expenditure and anysurplus or deficit on a weekly basis.Once the financial position of themember is clear, the credit union

proceeds to the Budget worksheetA personal budget plan is then drafted.

Bills are broken down into equal weekly ormonthly payments, spreading the cost ofbills evenly throughout the year. Thisensures that all bills for the year can bepaid.

The member’s credit union loan is paidweekly or monthly at the counter, anypayment to creditors are paid by cheque,and utility bills, rent, mobile phone, andbins are paid through PayPoint at thecounter as they fall due.

The credit union’s aim is to get themember on track and keep them on track.The Budget accounts are monitored on amonthly basis by Kay Allen, the creditunion’s Budgethelp@dcu Co-Ordinator toensure they are on target. Each member isalso assigned a member of staff as acontact point. The member is given aninformation pack containing a copy oftheir Budget schedule, Recipe Book, and10 Plan Shopping Guide.

The 10-Plan shows how to spend

portions of weekly food money so that theright foods are chosen to make a balanceddiet. The member is aware that the creditunion will not be in a position to pay some

of the agreed amounts on their behalfunless they maintain their side of theagreement.


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.

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

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!

Pictured is Kay Allen, Budgethelp Coordinator

Raymond Cassin, Member, Duleek Credit Union Limited

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.

Duleek Credit UnionBudgethelp@dcu

Some credit unions are helping out.The trick is to devise systems thatreduce the risk of lending to smallbusinesses. The methods used bySt Canice’s Kilkenny Credit Unionand Dundrum Credit Union isgetting local enterprise boardsinvolved in vetting and monitoringthe businesses and the loans wereoutlined in the Summer issue ofCredit Union Focus.

But, even with the best will in theworld, it is often impossible for acredit committee to approvebusiness loans particularly for newventures. There can be too manyuncertainties involved. What manysmall businesses need is riskcapital, shareholders who areprepared to lose all or part of theirinvestment in return for the chanceof making a better return than thatavailable on deposit accounts.

It is hard to justify lending to a

business that doesn’t have somesignificant equity capital.

Credit unions are not, of course,in the business of supplying suchrisk capital but they could help tomake it available by facilitating theestablishment of local investmentfunds. It is possible to structuresuch funds so that investors qualifyfor tax relief on their investments attheir top rate of tax while the riskcan be reduced by spreading theinvestment over a number ofseparate projects. The tax reliefcomes by way of the BusinessExpansion Scheme (BES), one ofthe Government’s tax relief schemesthat, unlike many property-basedschemes, has never been targetedfor abolition.

I’m not aware of any such fundsestablished on a local basis butvarious financial institutions offernational BES funds from time to

time. Locally based funds could offersome advantages over nationalfunds. Investors would be closer totheir investments and in a goodposition to offer help in the form ofexpertise and mentoring to theprojects involved.

Credit unions, along with otherlocally based organisation such asenterprise boards and chambers ofcommerce are ideally placed to helpin the establishment of such funds.The role of a credit union may onlybe as a facilitator in having a fundestablished and such a role woulddepend on any necessary legal andregulatory requirements beingsatisfied. The benefits to the localcommunity could be significant andsome credit union members mightbe willing to risk a small portion oftheir savings in buying shares,through the fund, in new localventures without any prompting or

advice from the credit union. They may be new expansion of

existing ventures or totally newbusinesses. Given the number ofpeople who have lost their jobs,there are plenty of would-beentrepreneurs out there.

Investing in a local BES fundwould provide those who are comingthrough the recession relativelyunscathed with a way of investing intheir own communities. The ideawould be to get such individuals toinvest in an equity fund that would,in turn, take shares in new start-upprojects. The greater the number ofprojects, the smaller the risk. Andthe risk of real loss would also begreatly reduced by making use ofBusiness Expansion Scheme taxincentives under which individualinvestors can get full tax relief on upto €150,000 a year put into the fundand invested in qualifying newventures.

The overall limit for investment inany one venture is €2 million but nomore than €1.5 million of that maybe invested in any one year. Withinthat overall limit of the totalinvestment in any single venture, anindividual can claim tax relief on upto €150,000, a lot more than mostpeople could possibly claim. To gettax relief on €150,000 in any oneyear you need to have an incomeconsiderably in excess of that.

Very few people could afford toinvest that amount in a local equityfund. But if a group of only 10

individuals were willing to investeven €10,000 each, a fund of€100,000 would be created to helpnew ventures. They, in turn, wouldpromote employment and businessactivity in the locality.

Under the Business ExpansionScheme, each participant investing€10,000 would get at least €5,000back by way of relief from tax andlevies. The investor buys shares inthe venture and gets full tax relief onthat investment. So for every €1 putin, a top-rate taxpayer gets a taxrebate of 41c and up to 11c relieffrom levies. But the shares have tobe held for at least five years.Normally there is an exit mechanismput in place to guarantee that thereis someone there to buy the sharesat the end of the five years. Whilethere can be no guaranteed price,there may be some agreed processfor valuing the shares at that stage.

Investors have to accept a risk.But provided the shares are reallyworth whatever is paid for theminitially, the tax relief provides asizeable cushion against loss. Thatproviso is a very important one by

someone making an arm’s lengthinvestment in a BES project i.e. forsomeone not directly involved in theventure.

In essence it is a generous taxconcession but investors do need totake care. Ideally investors shouldhave some hands-on experience ofthe venture but the next best thing isto invest in a professionally managedfund. So much the better if the fundis locally based and spread over anumber of ventures.

Those making the investmentdecisions would need to adoptprofessional and hard-headedvetting procedures unswayed byconsiderations other than thepotential of the proposed venture toyield a return.

The Business Expansion Schemewas first introduced in 1984 andafter a number of extensions it wasto have ended in December 2006.Although other tax incentiveschemes were being phased out atthat stage as being well past theirsell-by date, the BES scheme wasextended for a further 7 years

It’s a very valuable tax concessionaimed at encouraging riskinvestment in new businessventures. Only certain categories ofbusiness qualify. The investment hasto be made through the purchase ofcompany shares so that it isimpossible to avoid risk. That wasn’talways the case. In the early daysinvestors could be given guaranteesof one form or another which

Kick Starting the EconomyMany small and medium sized businesses arestrapped for cash and their financialdifficulties are going to slow the economicrecovery. The banks have become particularlyrisk adverse and government initiatives toencourage them to lend more are less thanadequate, if we are to believe the anecdotalevidence and the somewhat cautious welcomegiven to them by the business organisation,ISME, writes Colm Rapple


Should you wish to submit a question to the CU Queries Corner, please email [email protected] with CU QueriesCorner in the subject field. We will endeavour to answer all queries received. However, depending on the volume ofqueries, this may not be possible. Queries may be shortened or amended for editorial purposes.

What are PEARLS ratios and how were they developed?

Many different financial ratios and "rules of thumb" havebeen promoted for financial institutions worldwide, butfew have been consolidated into an evaluationprogramme that is capable of measuring both theindividual components and the system as a whole.

Since 1990, the World Council of Credit Unions(WOCCU) has been using a set of financial ratios knownas PEARLS. PEARLS is a financial performancemonitoring system designed to offer managementguidance for credit unions. The Irish League of CreditUnions adopted these PEARLS ratios and addedadditional ratios tailored to the Irish credit unionmovement.

Each letter of the word PEARLS represents a key area ofCredit 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 seensome recentcoverage aboutphishing scams.Can you adviseon what such scamsentail and how best todeal with them?

Phishing is a scam in which thefraudsters will ‘fish’ for privateinformation from a person via email. Inmany cases, the fraudster sends an email purporting tobe from a valid company requesting that the personupdates or verifies personal details or passwords.

The email often uses fear tactics in an effort to entice theintended victim into visiting a fraudulent website. Onceon the website, which generally looks and feels muchlike the valid site, the victim is instructed to login to theiraccount and enter sensitive financial information such astheir bank PIN number, their Social Security number,mother's maiden name, etc. This information is thensurreptitiously sent to the attacker who then uses it toengage in credit card, bank fraud or outright identitytheft.

Credit Union members should note that the Irish Leagueof Credit Unions and Credit Unions would never ask youfor this information either by e-mail or telephone and youshould never disclose this information to anyone.

Should you receive a phishing email, you should notrespond in any way to the email, except to delete itimmediately. More information and advice on onlinesecurity, protecting your identity and your personalinformation can be found at www.makeitsecure.org.

CU Advice Corner


Special General Meeting 2010O’Reilly Hall, University College Dublin

18th September 2010

effectively protected them from anyrisk. But such loopholes were closedoff many years ago.

At first the concession appliedonly to manufacturing industry. Itwas subsequently extended tointernationally traded services, thento a range of tourism projects. Alongthe way the list of eligible ventureswas widened out to include somehorticultural and music relatedventures. Recycling companies havenow been added to the list.

Traded services are ventures thathave to compete in the internationalmarket place. Tourism ventures to beeligible must be primarily aimed atbringing tourists from abroad. Whileinvestments in hotels, guest-houses,and self-catering accommodation areexcluded, that still leaves a widerange of possibilities although theyare possibly curtailed in the currentclimate. They include the following:

Caravan and camping sites;Holiday hostels; Holiday camps;Pleasure boat hire; Horse-drawncaravan hire; Equestrian centre

services; Sailing, yachting, marinaservices; Sub-aqua centre services;Heritage houses, castles andgardens; Game fishing services;Chauffeur drive for tourists; Outdooractivity centres; Tourism guideagencies; Tour coach services.

The project must be aimed atattracting tourists from abroad andmust have a three-year marketingplan approved by Fáilte Ireland.There are upper limits on theamount of the total investment thatgoes on land and buildings. It is upto 75% in the case of hostels,holiday camps etc; 70% in the caseof caravan and camping sites andequestrian centres; 65% in the caseof marina services; and 50% formost other projects. Furtherinformation can be obtained fromFáilte Ireland.

The concession was extended tothe music industry in 1996 forprojects involving the production,marketing and promotion of newartist's studio recordings andassociated videos.

Even with the investment limitsraised they remain relatively low sothat the businesses involved have tobe in the small to medium sizedcategory, the type of business that isthe economic lifeblood of manycommunities. The economicrecovery is being led by the exportgrowth of multinationals but it willneed to be sustained by localdomestic businesses. Theirsustenance and growth can behelped by the availability of localinvestment funds. There may be arole for credit unions in facilitatingthe provision of such funds.

Colm Rapple is an economist bytraining and a journalist by profession.During his career he has been businesseditor of the Irish Independent, theSunday Independent and of the IrishPress Group. He also writes andbroadcasts on personal finance issuesand is the author of the annual bestseller “Family Finance” which ispublished by Squirrel Press.


Credit Union OpenDay in Scoil Mhuire

Tilly still going Strong at 100Newmount Credit Union Limited believes they may have the oldestactive credit union member in the country. Their member Tilly Rooney,who calls in regularly to lodge into her account, was 100 in January ofthis year. Tilly attends the credit union AGM every year and proposesthe dinner for directors and voluntary staff. She raves how the creditunion saw the end of money lenders in the area. She refers to the creditunion as “Our Bank”.

Tilly who still does all her own cleaning and cooking is happy toprovide advice to young members. Her advice is to use the credit unionwisely and they could have a lifetime of access to credit. She is proud ofthe fact that the setting up of this credit union had seen the death knell ofmoney lenders in the area.

Pictured is Tilly lodging the “President’s Bounty” she received tocelebrate her 100th birthday. Receiving the lodgement is CaoimheMcCrory the youngest cashier in the credit union and looking on is thecredit union secretary Ted Rennick who was on the board of directorswhen Tilly joined the credit union on 4 April 1967 just one month after itwas formed on 1 March 1967.

In May, Marino Credit UnionLimited ran a Credit UnionDay in the local ScoilMhuire. The credit unionorganised the initiative toencourage young people tosave and give them anunderstanding of how it willstand to them in the future.Accounts were opened forthe children with GR8savercard given to all those whohad opened accounts. Thekids were deservedlyrewarded with free icecream and a performance

by a Transition Year studentband that was happy to playan impromptu set toentertain all present. Theday went exceedingly wellwith all the kids had a greattime, especially after themworking so hard theprevious few days with theschool play and end of theyear. The day was organisedby the credit union with theassistance of a number ofTransition Year students whowere on hand to ensureeverything went smoothly.

YOURstoriesDownpatrick CU

thanks Credit Unions

Staff, Directors and Volunteers ofDownpatrick Credit Union Limitedcompleted a sponsored climb ofSlieve Donard (Northern Ireland’shighest mountain) in order to raisemoney for PIPS Project. PIPS is acharity, based in Belfast, whichprovides help and support to thoseaffected by suicide and self harm.

With the help of our friends,families, generous members andother credit unions, we were able toraise a total of £1,400 for this veryworthwhile charity.

Pictured below are the staffmembers of Downpatrick CreditUnion Limited at the half way point

of Slieve Donard on 11th July 2010.We have thanked our members andwould like to take this opportunity tothank the following credit unions fortheir generous sponsorships towardsour event: Newry CU, HannastownCU, Banvale CU, Pomeroy CU,Ballycastle CU, Omagh CU, OrmeauCU, Keady CU, Waterside CU,Ballyhackamore CU, Cookstown CU,Longford CU, and Athlone CU.

For more information and photosof our climb, you can visit ourwebsite, www.downpatrickcu.comor for more information on PIPSProject, please visitwww.pipsproject.com

CHAPTER 25DEFINITELY HAS TALENT

The recent final of CU GOTTALENT 2010 definitely provedwithout a shadow of a doubtthat the youth of Chapter 25have talent by the bucket full.The audience were entertainedfor about three hours by avariety of acts from elevencredit unions in the Chapter.The judges Connor Clear,Emmet Kirwan and ClareMulhall had the unenviabletask of deciding the winners.

After a lengthy deliberation1st place went to Electra StageSchool representingKilnamanagh Credit UnionLimited, 2nd place to Outsidethe Box from Dunboyne CreditUnion Limited and 3rd place toMolly McHugh from GreenhillsCredit Union Limited. Of coursesuch an enjoyable night justdoesn't happen and all creditmust go to the Youth Officersunder the watchful eye andguiding hand of Chapter 25Youth Officer Tony Carey. Welldone Tony to you and yourteam. A donation of €1500 wasdonated to Pieta House at theend of the night. Tony informsus that next year's final will bebigger and better. Tough taskTony!

A new era dawns forKilkeel Credit Union Ltd.

Saturday 26th June 2010 was a very special day for KilkeelCredit Union Limited when directors, members and guestsgathered for the official re-opening of the refurbishedpremises and extension by Mark Bailey President of theILCU.

In 1979 the Credit Union purchased the former AIBPremises at 20 Newry St and in 1981 this was listed as beingan historic building. This impressive three storey buildingserved us well for many years, but over time it becameinadequate for our growing membership. In January 2006the Board took the decision to renovate the premises andbuild an extension at the rear. The fact that it was a listedbuilding meant that there were many hoops to go throughbefore building could commence. The architect and builderhad to work closely with the N.I Environment Agency’sHistoric Building Unit to ensure that the character of thebuilding was maintained. The original portion of the listedbuilding was fully restored and a contrasting modern singlestory extension was erected at the rear.

Kilkeel Credit Union Limited has now got a brightattractive main office, interviewing rooms, manager’s office,boardroom and a passenger lift which gives access to fullyself contained offices available for rent to the localcommunity business sector. It was great to meet foundermembers, past directors, local dignitaries, friends andmembers who had come to share this special day. KilkeelCredit Union having served the community for over 40 yearswill continue to do so in premises of which we are extremelyproud.


Father's Day saw upwards of 50people from the various creditunions in Chapter 25 descend onGowran Park for a day at theraces. In brilliant sunshine betswere placed each way and on thenose. jovial comments like "I had1st and 2nd in that race", "Mine is

still running" and "I don't think thatmine even started" were to beheard throughout the day. Theday culminated in a delicious mealin the Talbot Hotel Carlow wheresome of us at least won a raffleprize. A big vote of thanks mustgo to the Social Committee of

Chapter under the direction ofPhyl Smith for organizing such awonderful day. All arrived back inDublin around midnight safe,sound and tired. No-one hadeither won their fortune or losttheir shirt but a great day was hadby all.

Chapter 25 Goes Racing

Not yet twelve months from the untimelydeath of their former Manager, MartinMullen, Balbriggan Credit Union Limitedhonoured his memory by unveiling aplaque and dedicating and re-namingtheir former Board Room the ‘MartinMullen Training Room’. The unveilingceremony was officially carried out byMartin’s son, Gavin in the presence ofMartin’s family; his widow Clair; sonsDaniel and Stuart, and daughter Lisa.Stuart and Lisa were accompanied bytheir partners. Also present wereMartin’s surviving brothers, sisters,brothers-in-law and sisters-in-law;nephews and nieces also attended aswell as specially invited guests from nearand far.

The Chairperson of Balbriggan CreditUnion Limited, Noeleen Culbert gave aheart-warming speech about Martin andhis dedication to everything that wasconnected with the Credit Union. He hadformed a great deal of strongrelationships over the twenty years hewas working with staff particularly – all ofwhom were present; also with Directorsand Volunteers over those evolving years.His commitment to BCU and themovement were nothing short oflegendary. The event was just a small

way for the credit union honour hisname and to perpetuate his memory.

Clair also had some very special andpoignant words to say about her sadlydeparted, and greatly missed, husband.She thanked BCU for the very generousgesture in naming the old Board Roomin Martin’s honour. The immediate andextended family were very proud of this

‘Dedication’ and it will have a reveredplace in their hearts.

Finally, a poem dedicated to Martin’smemory was read out by staff member,Brian Howard, which encompassed themany heart-warming, amusing andvaried facets of their experiencesworking with Martin over the past twentyyears.


Chapter 5 of the Irish League ofCredit Unions has donated €2,000to the Irish Red Cross which wasused as a prize for the Irish RedCross’s ‘Carer of the Year’ award.This award is given to a family carerwho is an Irish Red Cross volunteeror member of the public. The aim ofthe award is to acknowledge thehard work and dedication ofinformal carers at home and in thecommunity. They provide anessential service to the vulnerableand display true humanitarianvalues.

This year, Margaret Rice from Co.Monaghan was the worthy recipientof this award, which was kindlydonated by Chapter 5. The decisionwas made unanimously by aselection panel who agreed thatMargaret’s dedication and hard workis truly exceptional.

Niall Friel and Sean Thompsonfrom Chapter 5 were present for thepresentation to Margaret in Cavanon 14th June. Pictured is Margaretreceiving her award from BrendanSmith T.D., Minister for Agriculture,Fisheries and Food.

Carer of the Year Award sponsored by Chapter 5

Dedication of the Martin Mullen TrainingRoom in Balbriggan CUs premises


Orla AwardedWYCUPScholarshipOrla O’Sheafrom TraleeCreditUnionLimitedhas beenselectedas one offivecandidates towin a scholarship toattend the 2011 World Credit Unionconference in Glasgow, Scotland.

Orla was originally selected by theIrish League of Credit Unions as one oftwo representatives of the Irish creditunion movement to attend WOCCU’sYoung Credit Union People Programme(WYCUP). Orla attended the WorldCredit Union Conference in Las Vegasin July and participated in wide-rangingdiscussions and workshops on keyissues affecting the international creditunion movement.

Following deliberations by theJudging Committee, Orla was one ofthe five candidates awarded a WYCUPscholarship. The scholarship isawarded annually to outstandingnominees whose skills andaccomplishments have already made asignificant impact within their owncredit union system. The individualsselected for the scholarship are thosethe committee believes to have thegreatest potential to contribute to theinternational credit union system.

Commenting on her success , Orlastated

“It was a great honour firstly to beselected as one of the two youngpeople to represent the Irish creditunion movement at WYCUP. To then beselected as one of the five winners topsoff the whole experience. Theprogramme provided me with a uniqueopportunity to network with youngcredit union professionals from all overthe world. It was a terrific experienceand I’m looking forward to puttingsome of the initiatives I’ve learnedabout into action.”

Pictured is Orla receiving her awardfrom Pete Crear, President & ChiefExecutive Officer - World Council ofCredit Unions (WOCCU)

St. Dominic’s Pay Tribute to RetiringBoard MembersSt. 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 voluntaryactivist with the credit union, serving on the Board of Directors and also on theSupervisory Committee. His last position, which he held for over 6 years, was HonTreasurer of Saint Dominic’s. He gave his time freely from collecting money in theDominican office, later in Mary’s street and then when staff was employed doingvoluntary work right through four decades. The credit union wish Jack and hiswife Maura health and happiness into the future.

Breda served the Credit Union for over two and a half decades. Breda’s ethoswas always to go that extra mile for the benefit of members. She was part of nearlythe original structure set up in Mary St. She learned the Voluntary Ethos of theCredit Union from her friend and fellow credit union President, the late DickLarkin and as a Woman president on two separate occasions Breda was held inhuge regard by both her fellow directors and staff. The credit union wish Bredaand her husband Christy health and happiness and many thanks from all in St.Dominic’s Credit Union Limited.

At the recent launch of the newlook Galway Bay FM Baycaster,Mr Mark Bailey, President of theIrish League of Credit Unioncomplimented the credit unionsof County Galway whosubscribed to the opportunity ofworking together with their localradio station.

The attractively designedBaycaster carries the names ofGalway’s 20 Credit Unions andhighlights the fact that 45 offices areserving the credit union membershipthroughout the County. As part of thisworking together sponsorship, GalwayBay FM will broadcast 20 credit unionadverts every week and each CreditUnion will receive an annual visit fromthe Baycaster for promotionalpurposes. Through this partnership itis hoped to raise awareness of thebenefits accruing to local communities

by supporting their local credit unionand radio station.

Many representatives of the WesternChapter of Credit Unions attended thelaunch. These included Pat Lawless(Chairman Chapter 16), projectorganisers Micko Bodkin, Gerry Walsh,Paddy O’Donnell and Joe McCarthy.Seamus O’Connell (Sales ManagerGalway Bay FM) and Gerald Du Bois(League Board Director) were alsopresent.

Macnean Credit UnionLimited comes of age

Macnean Credit Union Limited celebrated its 21st anniversaryrecently with a dinner dance in The Carlton Hotel Belleek. Thenight was a great success for our Guests which included ILCUPresident Mark Bailey, Chapter 17 representatives, and creditunion members.

Macnean Credit Union Limited was registered in July 1989after almost a year of study undertaken by 22 people from bondarea. They met every Tuesday night for two hours under theguidance of Jack Gormley, Peter McAloon and AlfieMontgomery.Above are the Board of Directors, Supervisors and staff ofMcanean Credit Union Limited with Mark Bailey, President,Irish League of Credit Unions.

Galway Credit Unions and GalwayBay FM Working Together

The Civil Partnership and CertainRights and Obligations ofCohabitants Act 2010 (“the Act”),was signed into law on 19 July2010. A Ministerial Order will berequired to bring the Act into effectand same is awaited.

The Act deals with both the civilregistration of same-sexpartnerships (Civil Partnership) andthe rights and duties of cohabitingcouples. The Act introduces verysignificant changes to the legalstatus of unmarried couples, bothsame-sex and opposite-sex and also

introduces various rights andobligations for cohabiting couples.

In particular the Act establishesthe creation of a new legalrelationship of Civil Partnership forsame-sex couples who formallyregister their relationship and whichmay terminate only on the death ofa partner or dissolution by a court oflaw.

Credit unions should be awarethat the Act amends section 35(10)and section 114(2)(b) of the CreditUnion Act, 1997. The amendmentto section 35(10) means that a

credit union may accept aguarantee for a loan from an officerof the credit union for his/her CivilPartner. The amendment to section114(2)(b) means that a person shallnot be qualified for election asauditor of a credit union if he/she isthe Civil Partner of an officer orvoluntary assistant of the creditunion.

Amendments to the StandardRules for Credit Unions (Republic ofIreland) will be brought to LeagueAGM 2011 to reflect the newlegislation.

Civil Partnership and Certain Rights andObligations of Cohabitants Act 2010

Credit unions will be aware that theILCU made a submission to the jointconsultation paper on “Proposals forRegulatory Reform of Credit Unionsin Northern Ireland” issued by theDepartment of Enterprise, Trade andInvestment (Northern Ireland)[DETI(NI)] and HM Treasury. TheILCU submission to this consultationpaper can be found on the ILCUwebsite: www.ilcu.ie. The next stagein this regulatory review process isthe examination of the submissionsreceived to the joint consultationpaper and the publication byDETI(NI) and Treasury of theirresponses to this submissions.

A meeting was held on 14 June2010 at Stormont betweenrepresentatives of the ILCU and theFirst Minister and Deputy FirstMinister of the Northern IrelandAssembly to discuss the recentdevelopments in the review of theregulation and legislation of creditunions in Northern Ireland. TheILCU representatives at the meetingexplained the ILCU’s positionregarding the proposed reform to theregulation of credit unions as outlinedin our submission to the consultationpaper. Both the First Minister andDeputy First Minister were verysupportive of the good work done bycredit unions in their localcommunities and as such stronglysupported the view that members ofcredit unions in Northern Irelandshould be able to avail of the samelevels of services from their creditunions as their counterparts in theRepublic of Ireland and NorthernIreland. They also agreed thatmethods by which credit unions

would be permitted to invest in theirlocal communities should beexamined.

In addition, credit unions will beaware that the newConservative/Liberal DemocratGovernment recently announced anintention to reform the regulation ofthe financial services in Great Britain.The proposal is to overhaul thesystem of financial regulation bydisbanding the Financial ServicesAuthority (“FSA”) and giving theBank of England powers over macroprudential regulation through a newlyestablished Financial PolicyCommittee. It is also proposed that a

new prudential regulator - thePrudential Regulation Authority - willbe established under the control ofthe Bank of England headed by anew Deputy Governor (the first ofwhom will be current FinancialServices Authority Chief Executive,Hector Sants), and which will beresponsible for supervising the safetyand soundness of individual financialfirms including credit unions in GreatBritain. It remains to be seen howthese proposed reforms of regulationof financial services in Great Britainwill impact on the current review ofthe regulatory structure for creditunions in Northern Ireland.

Regulatory Reform

LegislativeUpdate

The Central Bank Reform Act 2010(“the Act”) has been passed by theOireachtas and was signed into lawby the President on 17 July 2010.The Act, however, requires acommencement order to take effectand same is awaited.

The Act provides the statutorybasis for merging the functions ofthe Central Bank and the IrishFinancial Services RegulatoryAuthority (“IFSRA”), creates asingle, fully-integrated Central Bankand provides for the dissolution ofIFSA. The Central Bank will beresponsible for the prudentialsupervision of regulated financialservice providers, the conduct ofbusiness, including protection ofconsumer interests, and the

stability of the new financial systemoverall.

The Act also makes amendmentsto section 35 of the Credit UnionAct, 1997 (as amended) to dealwith the issue of rescheduling ofloans. An intensive lobbyingcampaign was carried out by thecredit union movement seeking toreduce the onerous nature of theprovisions as originally drafted. Theprovisions were subsequentlyamended by the Minister forFinance whereby the systems,controls and reporting requirementswere specifically tied to the lendingrequirements of the new section 35and the wider powers to enable theCentral Bank to make provisionsotherwise than by rules was

dropped. The ILCU subsequentlywrote to the Minister to request thathe utilise the power available to himin section 2 of the new legislation todefer the commencement of theseprovisions until such time asdetailed discussions with theDepartment of Finance and theFinancial Regulator take place onthe proper implementation of thenew provisions. In presenting theBill to the Seanad, the Minister forFinance had indicated thatreasonable conditions andtransitional arrangements wouldapply, therefore, it is hoped thatthere may be room for furthernegotiation around the transitionalarrangements for the introductionof these changes.

ROILegislativeUpdate NI


Rule AmendmentsAmendments to Rule 159 and Rule180 of the Standard Rules for CreditUnions (Northern Ireland) wereapproved at League Annual GeneralMeeting 2010. Credit unions willneed to bring these rule

amendments to the credit unionsannual general meeting for approvalby the members. Details of the ruleamendments are contained in theYear End documentation.

Central Bank Reform Bill 2010

EconomicCommentary


remained on a moderatingdownward trend since, down 7%

through 2009, reflecting weakconsumer confidence and low

disposable incomes. Consumption growth in volume

terms is likely to remain subdued inthe short-term and

consumers spending behaviour onthe whole remains reasonably cautious.A notable exception is the strong salesfigures for new cars due to thescrappage scheme. Overall, personalconsumption is forecast to decline by1.2%, in year-on-year terms, this year.Looking further ahead, the CentralBank predicts a modest pick-up inpersonal consumption of 0.9% for2011, in line with some recovery indisposable incomes and a furthergradual improvement in consumersentiment.

The Labour MarketThe scale and speed of the fall inemployment, to date, has beendramatic. According to data releasedby the CSO the number of people onthe Live Register in July 2010 climbedby 8,500 to 452,500. The CSO saidthe unemployment rate rose to 13.7%,from 13.4%, in June. A decline inemployment of around 3.9% isprojected in 2010, with further joblosses expected in the financial and

construction sectors. The generalmoratorium on recruitment to thepublic service is expected to placesome further downward pressure onemployment levels. Employment isprojected to be broadly unchanged in2011, with a decline in the region of0.3% giving an averageunemployment rate in the region of13.3%. It is, however, important tonote that the forecasted fall in theunemployment rate will arise solelyfrom a further fall-off in the labourforce caused by emigration.

Consumer Price IndexThe Central Bank believes that annualCPI inflation rate will likely turnpositive in 2011 and has projectedthat it will average 1.2% next year.

Property PricesThe Permanent TSB/ESRI house priceindex recorded a cumulative nominalfall in house prices of 34.1% betweenthe end of 2006 and the first quarterof this year. Significant differences inprice trends across regions haveemerged, as house price falls inDublin accelerated to 10.3% in thefirst 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 houseprices nationally of just over 4%.Private sector rents rose by over 1%in the three months to May, whichcompares to a quarterly fall of 0.7% inFebruary. Given continuingunemployment, falling disposableincomes and continued net outwardmigration, there is little prospect ofany notable pick-up in rents this year.

The Public FinancesIn early July, the key half-yearlyExchequer returns were published,showing an Exchequerdeficit in the first six months of theyear of €8.9 billion. This figure wasdown significantly from the deficit of€14.7 billion over the same period in2009. Overall, the Exchequer deficitwas broadly in line with expectations.In terms of revenues, tax receiptsamounted to €14.4 billion in the firsthalf of 2010, a fall of 8.7% year-on-year. This was slightly weaker thanexpected. Income taxes were 5.8%behind their expected target, ashortfall of €300 million in the first

half of the year, illustrating theextremely difficult labour marketconditions.

RevenueThe tax figures so far for 2010 havealso been broadly in line withexpectations, although therewas a modest monthly shortfall in June.The monthly tax data remains volatilehowever, and so annualised receiptsare seen by many as a better indicatorof emerging trends.

ExpenditureOn the expenditure side, total votedspending in the first half of the yearamounted to €21.5 billion, a decline of6.2% in annual terms. Increasednational debt interest charges andrelated payments also weighed on theexpenditure side of the Exchequerreturns, increasing to nearly €2.9 billionin the first half of the year and in theprocess accounting for a fifth of alltaxation receipts, as compared with€2.4 billion over the same period in2009.

Exchequer FinancingThe Exchequer Returns showborrowing of €7.6 billion in the first halfof 2010, down substantially from the€21.6 billion borrowed over the sameperiod in 2009.

Outlook for 2010In terms of the fiscal outlook for 2010,the latest Central Bank estimates pointto an underlying General Governmentdeficit of 11.8% of GDP, which issimilar to the targeted deficit in Budget2010 of 11.6%. In March, theGovernment announced the paymentof promissory notes to Anglo Irish Bankand Irish Nationwide, amounting to acombined €10.9 billion. With thepromissory note to Anglo Irish Banknow being reclassified within theGeneral Government Sector, the deficitfor 2010 would increase to a projected17% of GDP. Ultimately, taxation andexpenditure programmes will need tobecome more closely aligned, with anunderlying gap at present ofapproximately €20 billion, as theeconomy reverts to more normal andsustainable growth.

John Knox, ILCU Research andDevelopment Department looksat the performance of the IrishEconomy so far in 2010.

OverviewThe data fromthe Central Bank,ESRI etc. showed that in thefirst half of the year the economyperformed largely as had beenexpected. It would appear that theIrish economy is undergoing a modestrecovery this year following anexceptional period of decline in theprevious two years. The level ofoutput, as measured by GrossDomestic Product (GDP), is forecastto record a small increase of about0.8% this year following a decline of7.6% in 2009.

The recovery in world demand hasbeen somewhat stronger thanexpected this year, and the outlook isfor an ongoing recovery in worlddemand next year. Exports, which

proved to be resilient during thedownturn, have been the maindriver of the recovery in overall GDPgrowth in the first half of 2010.Following a sharp decrease last year,domestic demand has continued todecline this year, but at a slower ratethan the last two years. Consumerexpenditure dropped sharply at thebeginning of last year and has

“

”

The Central Bankbelieves thatannual CPI inflationrate will likely turnpositive in 2011 andhas projected thatit will average 1.2%next year


Credit unions in nearly all regionsworldwide saw an increase in membersavings and loan activity during 2009,according to World Council of CreditUnions' (WOCCU) newly released 2009Statistical Report. The trend illustratesthe increasingly more important rolesthat credit unions and other financialcooperatives worldwide played in theirmembers' lives during last year's globalrecession.

Total savings for all responding creditunions reached more than US$1.1trillion, the highest level recorded sinceWOCCU first began conducting theannual survey in 1972. The rate ofgrowth represents nearly a 15%increase compared to the US$995billion in savings reported in 2008.

Loans were another indicatordemonstrating strong growth over theprevious year, climbing to nearly

US$912 billion from US$847 billion in2008. This sizeable increase is furtheraccentuated in contrast to a slightdecrease in loans globally between2007 and 2008. Annual surveyrespondents from 97 countriesworldwide reported that 49,330 creditunions served nearly 184 millionmembers.

In recent years, credit unionsworldwide have seen notable growth inassets, membership, savings and otherindicators. Cumulative assets reachednearly US$1.4 trillion in 2009, up fromUS$1.2 trillion in 2008, and reservesreached nearly US$120 billion in 2009,up from slightly more than US$115billion in 2008. Strong financialperformance demonstrates members'renewed faith in credit unions'resiliency during difficult economictimes.


Surge in Global CU Savings & Loans

the magazine of the irish league of credit unions – autumn ... · pdf filepictured with...

Documents