In Europe, credit unions operate in the United Kingdom, Ireland, Poland and Lithuania. In addition to these countries, credit unions in the EU also operate in Latvia, Romania and Estonia, however, the laws of these countries do not provide for a specific act regulating their business, but operate in accordance with other laws governing the business of credit and financial institutions.
The work of credit unions is supervised by the Central Bank, the institution responsible for the regulation of the financial sector, the Ministry of Finance, or another statutory institution, with mandatory independent audit of business by the auditor designated by the Credit Union Assembly.
Savings Deposit Insurance
In most European countries, savings deposits in credit unions are secured in the same way and in the same amount as savings deposits with banks. In the wake of the financial crisis, most countries have raised their savings deposit limit to restore their confidence in the financial system, and so are world-wide examples of the United States (the limit is
temporarily raised from $ 100,000 to $ 250,000), Germany (limit is completely lifted and full savings guarantee is guaranteed), Australia (no insurance at all, up to AUD 1 million was introduced). In Poland, the limit has been raised twice, from € 22,500 to € 50,000 to € 100,000, as in the UK to the current level of GBP 85,000, and in the EU as a whole, from € 20,000 to € 50,000 and more recently to € 100,000.
Examples of developed markets in Europe are, first and foremost, the United Kingdom and Ireland, not only because of their importance in the market, but also because of quality legislation involving all stakeholders: credit unions, the Ministry of Finance, the regulator and the legislator. Also, in these countries, public debates aimed at amending the law have been conducted or are ongoing, or the amendments have recently entered into force after a systematic analysis of all the features relevant for the further development of credit unions.
The UK began reforming the legislation of the cooperatives and credit unions sector in 2007, a comprehensive survey conducted by the Ministry of Finance on over 200 individuals and organizations surveyed. The result of the initiative is the Amendments to the Credit Unions Act, which came into force on January 8, 2012.
The basic changes to the Act are as follows
- Credit unions are allowed to extend membership to more than one group of people, no matter where they live or work. The territorial principle has been extended in such a way that the maximum number of potential members who can join the credit union under this principle must not exceed 2 million.
- The number of so-called “non-qualifying members”, ie members who no longer satisfy one of the principles because they have changed their place of residence or place of work, is limited solely by the credit union statute, ie the rules that credit unions determine independently.
- Membership is not limited solely to natural persons, but also to legal entities that satisfy one of the principles, with the limitation that legal entities may account for a maximum of 10% of the total membership and 25% of the total ownership shares.
- As credit unions are regulated by the FSA, savings in credit unions are secured up to £ 85,000.
- There is a restriction that credit unions cannot charge interest rates higher than 2% per month, or EIRs of 26.8%.
Republic of Ireland
There are more than four hundred credit unions on the market
In the Republic of Ireland with around three million and savings of over thirteen million.
In March 2012, Ireland published the final Report of the Credit Unions Commission, a body established on 31 May 2011 at the initiative of the Government of the Republic of Ireland, composed of representatives of credit unions, the Ministry of Finance, the Registry of Credit Unions and independent experts in the field of finance and law.
In its work, the Commission had the support of occasional members, ie a five-member Secretariat of the Ministry of Finance, as well as a three-member working group made up of employees of the Central Bank. The report also contained a preliminary report from the Commission of September 2011, which made recommendations in relation to regulatory requirements, defined the powers of the Irish Central Bank, as well as the rights and obligations of credit unions in relation to a deposit insurance scheme.