European Parliament Credit Union Interest Group
In December 2014, ENCU launched the European Parliament Credit Union Interest Group. The Interest Group is an informal, all party European Parliamentary Group that meets twice a year (in spring and autumn) to raise awareness about credit unions and micro-finance among EU institutions and stakeholders.
ENCU consists of a network of experts that are able to brief the European Parliament and other EU decision-makers on credit union developments worldswide and in EU Member States. The Interest Group is Co-chaired by Vice-President Czarnecki (Vice-President of the European Parliament, Poland), MEP Harkin (ALDE, IE) and vice-chaired by MEP Tang (S&D, the Netherlands). The Interest group is also supported by 15 additional Members of the European Parliament:
- Member Matt Carthy (GUE/NGL, Ireland)
- Member Anneliese Dodds (S&D, United Kingdom)
- Member Frank Engel (EPP, Luxembourg)
- Member Victoria Ford (ECR, United Kingdom)
- Member Brian Hayes (EPP, Ireland)
- Member Mairead McGuinness (Vice-President of the European Parliament, Ireland)
- Member Luke Ming Flanagan (GUE/NGL, Ireland)
- Member Othmar Karas (EPP, Austria)
- Member Molly Scott Cato (the Greens/EFA, United Kingdom)
- Member Catherine Stihler (S&D, United Kingdom)
- Member Kay Swinburne (ECR, United Kingdom)
- Member Sirpa Pietikinen (EPP, Finland)
- Member Kazimierz Ujazdowski (ECR, Poland)
- Member Janusz Wojciechowski (ECR, Poland)
- Member Kosma Zlotowski (ECR, Poland)
To receive more information about the next meetings, do not hesitate to mail to firstname.lastname@example.org.
2015 Spring meeting of EPCUIG - Event summary
The European Parliament Credit Union Interest Group met on 16 April between 9:00 and 11:00 in Brussels to discuss regulatory burdens and financial inclusion. After a short welcome note by European Parliament Vice President Czarnecki Ryszard, the credit union representatives shared examples regarding efforts undertaken on financial inclusion in Estonia, Great Britain, Ireland, the Republic of Macedonia, Poland and Romania.
Brian McCrory (Irish League of Credit Unions) started the discussions by outlining various services provided by Irish Credit Unions such as a free lifesaving insurance or courses to broaden financial literacy. He explained that Irish Credit Unions represent the biggest member of ENCU with EUR 14 billion assets and average loans of EUR 8000. Their three million members can be found across the social structure. He clarified that the financial crisis further contributed to the good image of credit unions and led to an increased number of members.
Matt Bland (Association of British Credit Unions, Ltd.), Great Britain provided figures published by the UK Financial Inclusion Commission. According to the data, nearly two million UK citizens are unbanked and pay a poverty premium of £1,300 per year. Around two million took out a high-cost loan in 2012 with rates of up to 6000%. Furthermore, 8.8 Million citizens are over-indebted, 13 million have no savings and 15 million face financial distress. As financial products and services become ever-more central to everyday life credit unions play a vital role in addressing this public policy challenge and thereby focus on four key areas.
Credit unions everywhere provide a source of affordable, low interest borrowing. In Great Britain, credit unions can lend at a rate of interest ofno more than 42.6% APR compared to 1,500% (post-cap) from payday lenders or 400% from the leading doorstep lenders. Credit unions promote savings and encourage members to save while repaying their loans. Further services provided by many are payment accounts and budgeting services. Credit unions in all parts of Europe actively promote financial education and engage young people to help them develop a savings habit.
Eleonora Zgonjanin (FULM Savings House, Republic of Macedonia) explained that 47% of FULM's account holders are women and that its general goal is to provide financial services to a segment of the society that is disregarded by banks.
European Parliament Vice President Czarnecki provided a short introduction of the second topic on regulatory burdens. He shared CUs' concerns about the unintended consequences of regulation and excessive compliance burdens. He therefore urged CUs to continue this dialogue with EU decision makers in order to prevent overregulation at the European level and to guarantee the ongoing provision of financial services at reasonable rates.
Paweł Grzesik (National Association of Co-operative Savings and Credit Unions - NACSCU, Poland) clarified that credit unions do not generally oppose further regulation as it is essential for their inclusion in the financial sector. It is however crucial that European legislation takes the national characteristics of credit unions into consideration.
Florin Simion (Federation of Romanian Credit Unions - FEDCAR, Romania) explained that credit unions in Romania are considered non-financial institutions. As NGOs, they are falling under a self-regulatory regime provided for via a protocol with the Romanian Central Bank.
Andrus Ristkok (Estonian Union of Credit Cooperatives - EUCC, Estonia) explained that CUs in Estonia are regulated as savings and loans associations. Due to a lack of regulation, it was possible for loan sharks to enter the market four years ago and label themselves as Credit Cooperatives.
One potential contribution of EU lawmakers was the provision of guidelines for national governments when it comes to the implementation of European legislation. This could prevent issues from happening such as the varying capital ratio to be applied in Northern Ireland (3%) and the Republic of Ireland (10%).
Michael Edwards (World Council of Credit Unions - WOCCU, United States) summarized the second part of the meeting stating that the question of proper regulation will always be one of striking the right balance.
2015 Fall meeting of EPCUIG
The European Parliament Credit Union Interest Group met on 15 October to discuss the role of the EU regulatory system in supporting the advancement of Credit Unions as community organizations dedicated to financial inclusion. Representatives of cooperative banks, consumer and businesses associations, financial services delegates from the national permanent representations to the EU and European Commission officials, had the opportunity to share their expertise on how the European Union can support greater financial inclusion via credit unions.
As co-chair of the EPCUIG, MEP Czarnecki (ECR, PL) opened the meeting by recognising it was International Credit Union (ICU) Day (celebrated on the third Thursday of October since 1948). The day is recognized to reflect upon the history of the credit union movement and to promote its achievements. He stated, « It is a day to honor those who have dedicated their lives to the movement, recognize the hard work of those working in the credit union industry and to show members our appreciation. » He emphasised the crucial role of credit unions as community organizations dedicated to financial inclusion in the European economy and their role in support of micro credit and small-medium enterprises.
Moderated by MEP Harkin (ALDE, IE), the first part of the event included three credit union managers from Poland, the UK and Ireland describing credit union activities and structure. The managers pointed out the main challenges faced by their organisations. Margaret Heffernan, Manager of Rathkeale & District Credit Union Limited and Director of the Irish League of Credit Unions, noted that falling loan books leading to reduced loan interest earned, reduced investment income, regulatory burdens, aging membership, and difficulty in attracting young members and volunteers as current challenges to the credit union model. Mr Grzegorz Buczkowski, Member of Board of Directors, Stefczyk Credit Union, pointed out that in Poland there is a lack of certainty in the regulatory landscape and unequal treatment in comparison to traditional banks and called for a more level playing field. Mr Robert Kelly, General Manager, NHS Credit Union and President of Association of British Credit Unions, suggested that the regulatory burden is one of the main threats to the activities of credit unions, as well as highlighting that credit unions should be able to retain current relevance while embracing new technologies.
MEP Howitt (S&D, UK)moderated the second part of the event which focused on an open discussion amongst all the participants. Mr Erik Van Der Plaats, Senior Policy Expert for Bank Regulation and Supervision at the European Commission, highlighted how difficult is to balance the cost-benefit analysis of each financial proposal. He noted that using the proportionality principle is the key to better accommodate specific credit unions` needs.
Olivier Jerusalmy, Chair of European Financial Inclusion Network, highlighted that "savings" are mostly controlled by banks. He called for credit unions to disturb this de-facto monopoly. He recalled a Belgian Case as an illustration of the disparities in regulatory treatments, where providing ‘services' is extremely difficult if one is neither a traditional bank nor a co-operative.
Breege Anne Murphy & Pat Fay (ILCU) explained that Irish Banks see credit unions as genuine competitors because of the higher penetration rate of the credit unions and the difficulty in opening new credit unions in the current environment. Moreover, they called for greater enforcement of national discretion for exemptions.
Faried Aliyev, Head of Financials Services Team at BEUC, asked whether the surge of loan sharking on internet platforms has impacted the bottom line of credit unions. Michael Edwards from WOCCU explained how historically credit unions were created to combat loan sharking practices and to provide a more sustainable alternative to the poor. Credit unions continue to pursue this goal and fill the void left between traditional banks and more obscure shadow banking. But, regulatory rules that are sometimes over 100 years old are still restricting the ability of credit unions to continue with this function.
The lively roundtable debate was concluded with MEP Harkin inviting all the participants, and in particular the representatives of credit unions, to be pro-active in helping EU policy makers. She asked for the representatives of ENCU to push their MEPs and national representatives to keep credit unions at the top of European financial agenda.