The disclosure that outside accountants have been asked to examine the books of another credit union comes at a time when the hugely successful credit union movement is undergoing a period of decisive change. Colm Keena reports

In fact, the movement has been going through a period of decisive change for some time now.

A crisis began with the aborted attempt to introduce an IT platform for the member credit unions of the Irish League of Credit Unions (ILCU) a few years ago. That ended up being a €34 million fiasco and led, in turn, to the appointment of the Review Commission chaired by Mr Phil Flynn.

The commission in its 2002 report accepted that the ILCU board was "dysfunctional". The commission examined the minutes of every board meeting over the past four years. "The board functions not as a team but in a very fractured way; blame is spread around; suspicion is the order of the day; trust is absent. One consequence is that long periods of time can be spent approving the minutes of a previous meeting," it said.

The report was pretty strong stuff and came with a series of recommendations which the league is now in the process of implementing. It is also in the initial stages of a return to the IT platform project and gaining access to the National Payments System.

A number of the larger credit unions in the State have disaffiliated and formed the Credit Union Development Association. The Competition Authority is contesting aspects of the league's rules, claiming they are anti-competitive, and a case is due soon in the High Court.

Key aspects of the movement's nature include it being democratic and run by volunteers. These combine to mean that its difficulties are aired in a way that is not true of other, more private organisations.

Mistakes are mulled over in public for longer than might be the case with the major banks, for instance.

Despite all the controversy, however, the credit union movement is a great success. There are 438 credit unions registered in the State and they have combined assets of €10 billion. As well as loans of €5.6 billion, they have a combined investment portfolio of €4.5 billion. There are 2.4 million credit union members.

The difficulties being encountered by the movement are the product of its success. A model that was devised for smaller volunteer organisations designed to help local communities now overhangs a movement that includes individual credit unions that vary enormously in size.

The league fought against the movement coming under the responsibility of the Irish Financial Services Regulatory Authority (IFSRA). It lost that battle and it is now working with IFSRA on how the two bodies should operate together.

The league feels that the introduction of the type of regulation it fears IFSRA will seek, is a threat to its ethos and the sort of service it wishes to offer. The IFSRA credit union regulator, Mr Brendan Logue, says the new regime is not a threat. The chief executive of the league, Mr Liam O'Dwyer, says there is real cause for concern.

Mr Logue and a few of his colleagues went on a tour of the State, meeting credit union representatives and "chewing the cud" with them as to what needs to be done.

How the league and Mr Logue will work together is one of the key factors that needs to be addressed. Prudential issues are of concern to Mr Logue, who wants to put in place an "early warning system" that will bring developing problems to his attention.

A more professional approach to how huge amounts of money are being handled is an obvious area to be addressed, but it has to be achieved without placing too heavy a burden on the smaller, parish-sized credit unions that form such an essential part of the culture of the credit union movement.

These are the kind of issues that will be addressed over the coming months and years.