DUBLIN, Ireland–Ireland’s credit unions are poised to receive regulatory approval to raise loan rates.
According to Ireland’s Minister of Finance, Paschal Donohue, Ireland is pressing forward with such a plan, in spite of opposition from some government ministers, according to the Irish Times.
Ireland’s credit unions are currently limited to charging members an interest rate of 1% a month on their personal loan.
However, as the Irish Times reported, the Credit Union Advisory Committee has recommended to the government that the rate should be increased to 2% a month in response to fears retaining the ceiling at such a low limit reduces competition and could discriminate against high-risk borrowers.
In response to the plan, Minister for Social Protection Regina Doherty and Minister for Business Heather Humphreys were said to be anxious about the move, as was Finian McGrath, the Minister of State with responsibility for disability issues, the Times reported. Sources suggested to the publication there was concern about changes to the traditional ethos of credit unions.
Donohoe, however, does not need the ministers’ assent to prepare the required legislative change, and he is expected to move ahead with the move despite the concerns of some of his colleagues.
‘Materially Expand’ Offerings
In a statement to the Irish Times, Donohoe said he was committed to amending legislation that would allow an increase in the interest rate cap that applies to CUs and he has asked officials in the department to begin preparations to make the amendments required to facilitate this increase.
Donohoe said that if the proposals were realized, it would “materially expand the services being provided to credit union members.”
“The Government recognizes the important role played by credit unions as co-operative, not-for-profit financial services providers and as such I am strongly supportive of a strengthened and growing credit union movement,” Donohoe said. “I would encourage credit unions to continue to develop their business models, while looking to further provide for both their members and their common bonds, and further fulfil their important role in society,”