Only radical reform will restore the credibility of the credit union movement. With more than 2.2 million members and 530 branches, the expansion has been hugely successful in business terms.
Such growth demands effective management. Yet the loss of €34 million on a bungled computer project supports a perception that the movement's structures are seriously outdated. Certain branches are threatening to leave the Irish League of Credit Unions, which co-ordinates the movement.
It was against this backdrop that a consultant, Mr Phil Flynn, was hired last year to examine the league. Now complete, his incisive report makes searching observations about the state of the movement. It finds a deficit of trust between member unions and the league and says the breakdown has it roots in issues of confidence, structure, accountability and communication. The situation is grim.
Calling for urgent change, Mr Flynn says effective and focused leadership is needed. With more than €6 billion on deposit for members, this seems like a basic requirement. But Mr Flynn notes that the board functions in a very fractured manner. Blame is spread around, trust is absent and suspicion is common. This is clearly unsatisfactory. Thus Mr Flynn is right to state that fundamental restructuring and refocusing is required. The are other challenges. The movement is beset by declining margins, competitive pressures and increased complexity in the financial services business. After the €34 million write-off, it still needs to develop a new computer system.
The immediate priority for the movement is to embrace the spirit of Mr Flynn's report and implement his recommendations for reform in full. These will be discussed at a special meeting on June 9th. It is an opportunity that should not be avoided. Mr Flynn notes that three previous reports since 1991 were not acted upon. If they had, he says, the current difficulties might have been avoided.
The league prevented journalists from attending its a.g.m. Still, it takes pride in its democratic structures and likes to be seen as a peoples' bank. This mandate has been used to extract concessions on DIRT and will be cited when the league seeks a form of self-regulation under the new Irish Financial Services Regulatory Authority. If this is to be secured, the league will have to demonstrate a clear commitment to reform. The movement was established on the principle of self-help. Failure to reform would do no justice to its considerable achievements.