Credit unions’ plan is in breach of Central Bank rules

A scheme by a consortium of credit unions to introduce an alternative to bank current accounts is being treated by the Central Bank as a breach of the State's financial regulations, The Irish Times understands.

Details of the scheme, which involves 11 credit unions, were revealed on Tuesday despite the absence of Central Bank approval.

It involves a debit card to be made available to more than 350,000 credit union members in the coming weeks.

The Central Bank said on Tuesday it had not approved the product and its associated fees and charges because such services must be supported by an appropriate transaction account.

“This service is subject to formal application and approval,” it said.

The 11 credit unions, collectively known as DCG Card Services, said yesterday they had been in talks with the Central Bank for the past four years and that the debit card was an "exempt additional service" that does not require approval.

“We are not launching a new account,” the group said in a statement. “The debit card will operate on existing members’ accounts.

The payment account is a separate matter to the launch of a debit card.”

Against regulations

It is understood the Central Bank is insistent the scheme does require approval, and believes it contravenes the State’s financial regulations. An investigation is expected.

The participating credit unions are: Gurranabraher, First South in Cork, Tullamore; Mullingar, Waterford, St Canice’s Kilkenny, Navan, Tralee, Health Services Staff, Mitchelstown and Ballinasloe.

The card would facilitate contactless payment and supports electronically enabled accounts, online access and transaction facilities. It would attract a typical annual cost of upwards of €36.