Credit Unions: Structure, Regulation and Services
What a credit union is
A credit union is a member-owned, not-for-profit cooperative that takes savings (shares and deposits) from members and lends to members. Members must share a common bond (e.g. locality, employer or association). Each member typically has one vote, regardless of shareholding - a key democratic feature examiners like to test.
Regulation and protection
Know that credit unions are regulated by the Central Bank of Ireland under the Credit Union Act 1997 (as amended) and the 2016 Regulations. Understand the Deposit Guarantee Scheme, which protects eligible deposits (including credit union deposits) up to €100,000 per depositor per institution. Be aware of prudential requirements such as reserves and liquidity ratios, and the role of the Credit Union Restructuring Board and stabilisation supports.
Services and lending
Credit unions offer savings accounts, member loans (often at competitive rates, with a savings-to-loan offset), current accounts and payments, and increasingly mortgages and insurance through intermediaries. Lending is typically limited relative to shares held, and loans must be for provident or productive purposes.
Traps to watch
- Confusing the common bond requirement with open membership.
- Assuming deposits are unlimited - the €100,000 cap applies.
- Mixing up one member one vote with shareholder-weighted voting.
- Forgetting that credit unions are not-for-profit and member-owned, unlike banks.
Rule of thumb
Think "members, not customers": ownership, voting and surplus distribution all flow back to members, and regulation sits with the Central Bank under the 1997 Act.