Credit Union competition: why is a single credit union allowed to have a monopoly in an area?

24-06-2023 03:56PM #1

A credit union a few parishes away is offering the cheapest car loan I can find online. I rang them up to see about joining and the lady on the phone said because I live in another area I can only access the credit union in that area. The neighbouring credit union is charging 4.95% APR (https://www.kilcu.ie/) and the credit union is my area is charging 9.4% APR (https://creditunionplus.ie/car-loans/). That's an utterly whopping difference

Why are these monopoly positions held by local credit unions allowed under Irish law? My local credit union is nothing but a financial business just like AIB, BofI and all the rest. In fact, my local credit union is gone as like many others across Ireland it joined a larger one and it's a mere branch of that now. Why does Irish law continue to treat credit unions like they are not pure, unadulterated financial businesses and instead are some sort of benign financial institutions which do not have the same financial regulations and criteria to apply in giving loans?

Geuze · 25-06-2023 12:25AM

One of the key features of a CU is the "common bond".

All the members have a common bond.

For example: Garda CU, all the members are Gardai.

TUI CU, all the members are members of the TUI trade union.

Most CU use a geographical common bond, e.g. Tralee CU, open to people who live in and around Tralee.

Jim2007 · 25-06-2023 04:41AM

MOD: This is a question of public policy not a question on a specific financial product and as such it is better suited to one of those forums. So we will keep this short and to the point.

A CU is not a commercial entity like a bank or a similar lending institution, they were founded and driven much like most of the cooperative movement with the objective of helping the community they serve rather than making a profit and as such competition would not be in the interest of the community. It’s lending ability, rates etc is very much driven by the community it serves, a community with a steady income such as say teachers, industrial workers or the Garda might have a higher level of deposits and thus can lend more easily and cheaper to its members than say one serving a community of small farmers with a seasonal income.

Now you could argue that times have changed, the law needs to change etc…. But that is a discussion for the current affairs or related political affairs forums.

Montage of Feck · 25-06-2023 05:55AM

I'm a member of two CU's neither of which are my nearest one. Seems bizarre they wouldn't take you on especially as your looking to take out a loan

Credit Union competition: why is a single credit union allowed to have a monopoly in an area?

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