The Irish League of Credit Unions writes this week to 12 credit unions initiating the process of expelling them from the movement over their failure to do business with its monopoly insurance business.
In what is believed to the biggest large-scale disaffiliation from the movement's 535 members, the league's board decided last weekend to proceed with the process of removing 12 members who have taken their insurance business elsewhere. When contacted, the league spokesman would only confirm the disaffilitation had begun.
The process could take up to a year. But the decision to write to the unions effectively rubber-stamps a move to remove the members last November. That development followed legal advice which stated that a requirement on member unions to do business with the league's monopoly provider did not offend competition rules. The advice was sought after the Competition Authority revoked a certificate which said that obligation to deal with ECCU did not offend the Competition Acts.
While credit unions are obliged to take out loan protection insurance policies in respect of their lending, some have complained that ECCU charges rates of up to 30 per cent above market average.
The league previously rejected complaints to the Competition Authority as "inaccurate, highly misleading and unsubstantiated".
Many of the unions facing expulsion are fast-growing organisations in major urban centres in Dublin and commuter towns near Dublin. Sources in the movement believe the decision is virtually unprecedented in an organisation which argued against a split after it lost more than €30 million on a bungled computer project.
Some informed figures believe some of those subject to disaffiliation may try to block the process by seeking injunctions in the High Court. If that arises, the league is expected to defend its action. However, the stance of the Competition Authority is believed likely to have a crucial bearing on the outcome of any such case.
The league has said the steps being taken have widespread support within the movement. The insurance issue is crucial because the league traditionally been funded with ECCU's monopoly profits. An attempt last November to change the funding structure was voted down at a special delegate conference.
The Dublin-based unions facing expulsion are: Blanchardstown; Dundrum; Coolock-Artane; the DubCo credit union in Dublin City Council; and St Agnes's in Crumlin-Drimnagh.
The others are: Bray and Greystones in Co Wicklow; Newbridge, Co Kildare; Mullingar, Co Westmeath; Dundalk, Co Louth; St Anthony's in Claddagh, Co Galway; and the Comhar Linn credit union in the Irish National Teachers' Organisation.
Two other credit unions - in Lucan, west Dublin, and Tullamore, Co Offaly - had already signalled to the league that they would leave after withdrawing their insurance business from ECCU. Some 535 credit unions are affiliated to the movement with 2.6 million members holding savings worth €7 billion.
