The Irish League of Credit Unions (ILCU) has moved to expel about 12 member unions that have taken their life insurance business away from the league's monopoly supplier.
The development comes almost half a year after the Competition Authority revoked a certificate which stated that a requirement on member unions to do business with the league's supplier, ECCU, did not offend the Competition Acts.
The revocation was seen as having the potential to open the lucrative credit union assurance market to competition. But the league said yesterday that it had received legal advice stating it was not in breach of any competition rules. This is the league's first public comment on the matter. It is understood that it has not yet responded to the Competition Authority.
About 535 credit unions are affiliated to the league, with 2.6 million members South and North of the Border holding savings worth €7 billion. Disagreement over the assurance business is the subject of a long-standing row and the development marks a significant attempt by the league to protect ECCU's mandatory status.
It comes as up to 21 other unions threaten to withdraw from the league altogether over its stewardship of the movement and over its plans to recoup up to €31 million lost in a bungled computer project.
The league pledged to reform earlier this year after a critical report shed light on the degree of internal tension and dissent. But while its president, Mr John O'Regan, stated last week that the movement had "turned the corner" in the reform process, the decision to remove members suggests that internal disagreements persist.
The league has traditionally been funded with ECCU's profits and an attempt last month to change the funding structure was voted down at a special delegate meeting.
Likely to be expelled are certain small and large-scale unions, including those in the Dublin suburb of Lucan and Bishopstown in Cork. The Lucan union has assets worth more than €27 million , while the Bishopstown organisation has assets of more than €63 million.
A summary of decisions taken by the league's directors at a meeting on November 9th and 10th, which has been seen by The Irish Times, states: "The board has decided that the necessary steps be initiated to disaffiliate credit unions which are in breach of league rules."
This was a reference to the credit unions that have withdrawn their assurance business from ECCU because they claim the rates it charges are up to 30 per cent above the market average.
The league confirmed yesterday that the disaffiliation process had begun and said letters would shortly be sent to a number of credit unions that are in breach of the rules.
A statement said: "The league is implementing the rules democratically agreed by the movement itself. The success of credit unions over the years has been largely due to the fact that they have worked as a unified group and as a co-operative and the rules that have been put in place reflect that fact."
It added: "The steps being taken by the league have widespread sympathy in the movement and were agreed by delegates representing over 300 credit unions at a recent debate in Galway."
The league has previously rejected complaints made to the Competition Authority about ECCU's pricing structure. It claimed the complaints made to it were "inaccurate, highly misleading and unsubstantiated".
