Credit unions have called on the Government to make regulatory changes to enable them to provide more lending for mortgages.

In an article in the Sunday Independent yesterday (20 February), the minister with responsibility for the sector Seán Fleming (pictured) said that credit unions should “fill the gap” left by the departures of Ulster Bank and KBC from the Irish market.

In a response, however, the Irish League of Credit Unions (ILCU) said its members were “handcuffed” by the restrictive lending limits for mortgages prescribed by the Central Bank.

The ILCU pointed in particular to a limit on lending for mortgages and small businesses (SMEs) of 7.5% of total assets for most credit unions.

Review ‘an opportunity’

“For example, a credit union with assets of €70 million, taking an average mortgage of €350,000, can only offer 15 mortgages under the current limits, exclusive of any SME lending,” the organisation said.

“If they have SME lending then the number of mortgages they can offer reduces accordingly within the strict 7.5% lending limit,” it added.

David Malone (ILCU deputy CEO) called on the minister to address this “imbalance” in a forthcoming review of the policy framework within which credit unions operate.

“The publication of this policy framework review presents a once-in-a-decade opportunity for the minister to empower credit unions to realise their full potential in filling the gap left by Ulster Bank and KBC and, in doing so, offering a community-based alternative to the remaining banks to the Irish public,” he said.