Donohoe set to allow credit unions increase cost of loans – The Irish Times

Posted on:

Minister for Finance Paschal Donohoe is to proceed with plans to allow credit unions increase the cost of loans they offer their customers, months after he was met with resistance from his Cabinet colleagues on the issue.

Credit unions are limited to charging customers an interest rate of 1 per cent a month on their personal loans, thus ensuring access to loans at a reasonable rate.

However, the Credit Union Advisory Committee (CUAC) has recommended to Government that this should be increased to 2 per cent a month, amid fears that retaining the ceiling at such a low limit reduces competition and could discriminate against high-risk borrowers.

Mr Donohoe is expected to bring a memo to the weekly Cabinet meeting on Tuesday which would follow through on the CUAC proposal.

Earlier this year, he brought the same issue before Cabinet but a number of Ministers raised concerns.

Minister for Social Protection Regina Doherty and Minister for Business Heather Humphreys were anxious about the move, as was Finian McGrath, the Minister of State with responsibility for disability issues. There was concern about changes to the traditional ethos of credit unions at the January Cabinet meeting.

Leave a Reply

Your email address will not be published. Required fields are marked *