LOCAL CREDIT UNIONS FILL THE BREACH AS RECESSION BITES HARD
With the continuing banking crisis and the stranglehold on credit many people are turning to their local credit unions for help. Credit unions in both Fermoy and Mitchelstown are reporting a steady flow of people availing of the financial products on offer but how safe is the credit union system and how can they help those people facing employment uncertainty and the growing cost of living?
The Avondhu put these questions to John Collins, manager at Mitchelstown Credit Union and Pat Morrissey, marketing and development officer the Fermoy Credit Union - “Our credit union is in a strong place we have good reserves and the board have been very prudent with putting aside funds (provisions) in the case of loans not been able to be repaid as quickly as agreed when the loan has been taken out, “ Pat Morrissey said.
“We are constantly doing risk assessment on our loan book and adjusting provisions accordingly. We are regulated by the Central Bank, and the Registrar of Credit Unions has been very active over the last three years, we have all our statutory reserves exceeded and are well equipped to weather any storms that we meet. Fermoy Credit Union is extremely important to the local community. It is, and this is very important, it is a cooperative owned and run by the members,” he added.
In Mitchelstown, manager John Collins has seen an increase in the number of people looking for financial assistance: “We are finding that there is a general inertia in the lending market. More people are coming to credit unions because the banks are, to a large extent, failing to lend.
"The availability of credit from financial institutions remains an issue, which the Government needs to address as part of the injection of taxpayers’ money/state funding into the major banks. Like almost every financial institution around the world, the past two financial years have been very difficult. 2010 was probably the most difficult in the past years.”
“Credit unions have not been immune to the current challenging economic circumstances and we are not an exception to that rule.
"However, we are working hard to continue delivering our services to our valued members and we are working to maintain our record of service to our members and to remain a dedicated part of the local community.
"In addition we are dealing with many new regulations, which are coming on stream as part of the changing financial landscape. Many credit unions have decided to favour the availability of credit over the delivery of dividends. In these difficult times more people need access to credit,“ Mr Collins told The Avondhu.
However, for the many people who now find themselves in financial difficulty the credit unions can help, “There are people who genuinely cannot afford to repay their agreed repayments. These loans were drawn down based on a member’s ability to repay and now that ability has been reduced, “ Pat Morrissey of Fermoy Credit Union continued.
DIGNITY AND RESPECT
“Firstly, we treat each member who is experiencing difficulties with dignity and respect. However, to be able to judge that these cases are genuine we need to see an income and expenditure account and this has to be backed up with proof. i.e.. Proof of other debts, have other institutions reduced their repayments etc, mortgage repayments. It is the same as applying for a loan almost and we have to ensure that the credit union is not the last to get paid.
In general members have been very understanding about this but some and they are in the minority want agreed loan repayments reduced but have not adapted their lifestyle to suit their new wages i.e. still thinking they can go on foreign holidays, skiing, eating out a few times a week, excessive drinking etc and they want to reduce repayments to fund this lifestyle.”
DEBT MANAGEMENT AGENCIES
“The credit union cannot and will not allow this to happen. It has to make a judgment that people are being responsible in this economic climate. We have a budgeting officer to help members fill in forms and give them assistance in applying to the credit control committee for reduced repayments.
We are coming across some people using debt management agencies and they are being charged exorbitant fees for doing something they can do themselves with a little bit of help. We have seen upfront fees of over €400 just for consultation and then €50 plus a month to post out these funds. They are unregulated and why would you give your monies to an unregulated firm. Eddie Hobbs highlighted the problems with these firms on the Consumer Show on RTE recently,” Mr Morrissey added.
SAFE AND STRONG
Mitchelstown Credit Union is also well provisioned and ready to help anyone who has difficulty repaying loans.
“This credit union is safe, strong and secure as you will note from our recent AGM. Since its foundation, Mitchelstown Credit Union has been at the heart of this community, lending a helping hand to those who are in need. Mitchelstown Credit Union Ltd continues to operate successfully in the best interests of all its members and will continue to be a valuable source of financial support to our members and the wider community in these difficult economic times.”
“Members’ savings here in the credit union are secure. We can assist people who are facing employment uncertainty by continuing to offer modest loans to credit worthy members and to assist all of our members with their budgeting and money management, “manager, John Collins said.
REFUSE TO ENGAGE
Both credit union officials have also encountered people who refuse to engage with the credit unions when they find themselves in trouble, “We also have members who will not engage with the credit union and these are a different category, these can be broken down into two categories, those who are embarrassed by the their new situation or those suffering stress and mental problems, we will try and engage with these members and get them on a reduced repayment plan without resorting to legal action.
"Then there are the members who can but won’t pay and these members have to unfortunately be brought down the legal route and we have to apply to the courts for a judgment and eventually an instalment order.
"These judgments are published and will affect a members credit history for a long time, Ireland will come out of this recession and by engaging with the credit union now you can avoid a poor credit rating that you will need to borrow again during the good times,” Pat Morrissey concluded.
John Collins in Mitchelstown also urges anyone in difficulty to contact the credit union.
“We urge any members who find themselves in financial difficulty to contact their local credit union as soon as possible. The credit union will endeavour to work with the member to find an acceptable solution,” Mr Collins added.
Friday 6th May 10:33am