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Credit unions restricted in lending 24.10.11

by Eamonn Mac Dermott, Inishowen Independent

LENDING restrictions being placed on some credit unions run contrary to the “ethos of the organization”, the treasurer of Foyle Credit Union in Moville has said.
Brian Barr was speaking after restrictions were placed on many credit unions by the Registrar of Credit Unions that will govern how much they can lend to members.
Under the new regulations even long term members of good standing could find difficulty in securing loans.
Mr Barr who is also the treasurer of Chapter 1 of the Irish League of Credit Union said: “Foyle Credit Union, which comprises Moville and Muff, is one of the few not to have any restrictions placed on us but even we have to be more cautious when it comes to lending.
“In the current climate we can no longer give out loans the way we used to.”
Under the new regulations some credit unions would be restricted to handing out loans of no more than €500 to €1,000 which would be a move away from the original ethos of the movement which usually worked on the principle that a member could borrow two or three times their savings.
Brian Barr added: “We have never been and we would never aspire to be anything like a bank but these regulations almost force us into a banking attitude.
“We are now facing situations where if someone applies for a large loan they may not get it regardless of how much they have in their savings.
“When the new regulations were being debated in the Dáil this week we successfully lobbied for some changes.
Brian Barr.
“But ultimately these new regulations will hit the less well off the hardest. People who would have borrowed to help their children through college may find they are unable to do so.”
He also urged all members who may find themselves in trouble financially to keep in contact with their branch to find out what can be done to help them.
During the debate on the new regulations in the Dáil Sinn Féin TD Pearse Doherty described them as “blunt instrument that will push families into the hands of money lenders”.
Deputy Doherty said: “More than 50% of credit unions across the state have had lending restrictions imposed on them by the Registrar of Credit Unions.
“As a consequence, financially sound credit unions are unable to extend loans to long-standing customers who, in the view of their local credit union manager, should be granted a loan."
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