Increased Central Bank levy will hit the most vulnerable
Denis Naughten TD will this week table an amendment to the Finance Bill seeking a freeze on the introduction of an increased Central Bank levy on credit unions. The levy would force them a significant rate hike hitting the most vulnerable in communities throughout the country.
Earlier this year the Central Bank announced plans to increase the Industry Funding Levy on credit unions from approximately €1.5 million per annum to €7.8m by the end of the 2021 for the 240 credit unions across the country.
Denis Naughten has now tabled an amendment to the Finance Bill, which will be debated in Dail Eireann next week, that would cap the levy placed on credit unions.
He said: “The Central Bank must recognise that credit unions are not for profit, community based and volunteer led organisations. The fact is that in many parts of rural Ireland the credit union is the only open, accessible financial service in the community.
“Credit unions are not the same as banks and they should not be treated the same. The reality is that many of the customers that use credit unions are not wanted by the big banks. If they cannot get access to loans for times of the year like Christmas then they will be forced into the hands of loan sharks and that is in nobody’s interest.”
The League of Credit Unions carried out a survey on the impact of the proposed Central Bank hike in the levy for small, medium and large credit unions (see table below).
For a very large credit union with €287 million in assets, the current levy is €28,715 per annum, this would jump to €57,430 with the first increase and to €143,574 per annum by the end of the cycle.
For a medium sized credit union with €60 million in assets, the current levy is €6,022 per annum, this would jump to €12,045 with the first increase and to €30,111 per annum by the end of the cycle.
For a very small credit union with €15 million in assets, the current levy is €1,454 per annum, this would jump to €2,908 with the first increase and to €7,271 per annum by the end of the cycle.
Denis Naughten pointed out: “We must have a system within the Central Bank that recognises that credit unions are different and their impact in communities across Ireland should be taken into account when calculating these levies.
“I hope that Minister Paschal Donohoe takes on board my proposal because I know that he is personally very supportive of the credit union movement,” concluded Denis Naughten.