The Competition Authority's victory raises problems for the credit union league, writes Colm Keena
The High Court judgment delivered yesterday would seem to further weaken the role of the Irish League of Credit Unions (ILCU) within the credit union movement.
The main source of the league's funding is now in trouble and sources within the movement are not clear if any "plan B" exists for funding its operations.
Members are also furious that the league's head office has spent such a large amount of money, probably well over €500,000, fighting the Competition Authority in the High Court.
The league is a hugely successful organisation that has been suffering body blows in recent years as a result of its seeming difficulty in keeping up with the times.
The league operates as a lobbying organisation for its member credit unions. Years ago it set up an insurance company to provide insurance to members, making it mandatory for members to use the league's company. The idea was to provide protection for smaller credit unions who might otherwise have difficulty getting reasonable insurance cover.
The league also set up a savings protection scheme (SPS), a scheme into which member credit unions made contributions and which was there to assist credit unions that got into trouble. The fund at the heart of the SPS scheme is now worth close to €90 million.
When a number of credit unions said they were going to source their insurance elsewhere, because the league's insurance was significantly above market rates, they were threatened with disaffiliation from the league.
The credit unions threatened with expulsion were told they would be refused access to the SPS and they complained to the Competition Authority. This led in turn to the High Court hearing.
The court's ruling means that credit unions that are outside the league will now be able to get access to the SPS. The judgment does not seem to mean that members can no longer be forced to use the league insurance, but it may have that effect. The consequences of being thrown out for refusing to use the league's insurance company are not now so grave.
A few years ago there was a huge bust-up within the movement over a disastrous attempt to build an IT platform for member credit unions. Millions were invested in what turned out to be a complete disaster. The SPS fund was dipped into to the tune of €7 million. A review subsequently established and headed by Mr Phil Flynn reported that the league was "dysfunctional" and set out a list of changes it believed should be implemented.
Another row is now likely over the league's management of its dealings with the Competition Authority. The case in the High Court went on for 11 days. Costs are likely to be in excess of €500,000 and who gets to pay them will be ruled on in three weeks' time.
Expenditure by the league of funds that came from members, on matters such as High Court battles with the Competition Authority, is the sort of issue that can raise temperatures within the credit union movement. The next delegate meeting is scheduled for April 2005 and will no doubt discuss the matter.
The league was making little comment yesterday, on or off the record. It has a 171-page High Court judgment to mull over, and silence is understandable. The Competition Authority is pleased, as it now has a lengthy written judgment interpreting aspects of the 2002 Competition Act, which it can use as an aid.
Representative bodies in all walks of life that offer services that can be called economic, and which hold a dominant position in their field, might usefully consider if the ruling has any implications for them.
