A new report on the credit union sector says the movement has the capacity to survive and flourish into the future, but change must be part of that process.
The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach today published its report on the Review of the Credit Union Sector.
The report said the credit union movement is facing several challenges including expanding its loan offerings, attracting a younger and broader customer base and securing additional and diverse investment opportunities.
The movement must also formulate a strategic plan and blueprint that sets out a vision for the future operations and long-term sustainability of the sector.
One of the Committee's key recommendations was that credit unions be "empowered" to contribute to alleviating the current housing crisis in the State.
"Serious consideration should be given to enabling credit unions to utilise their substantial assets to lend to approved housing bodies and help alleviate the housing and homelessness crisis," the Committee stated.
It also said a review of the legislative framework and regulatory requirements applicable to the credit union sector should occur to ensure that they are fit-for-purpose and proportionate in the context of the post economic crisis period.
Today's report pointed out that the current average loans-to-assets ratio of 26% is an issue of serious concern in terms of the future viability of the credit union movement.
"The figure should at a minimum be in the 40-50% ratio range and on that basis the Committee recommends that the issue be addressed by all stakeholders as a matter of urgency," it stated.
The Committee has also recommended the implementation of a tiered regulation of credit unions. It said this will ensure a proportionate application of the regulations and will take into account the individuality and diversity of credit unions within the broader movement.
It also called for the introduction of a new appeals mechanism which would allow credit unions to appeal all regulatory-related decisions made by the Central Bank to an independent body.
Committee Chairman John McGuinness said that credit unions play a crucial part in the country's financial system but, like all financial institutions, they were hit by the recession.
"Credit unions must grow and develop if they are to survive in such a competitive financial market, while continuing to serve the needs of their communities and practise responsible lending," Mr McGuinness said.
"This report strikes a balance between advocating a partial transformation of the sector in order to allow it to flourish, while also maintaining its community-based ethos," he added.