Credit union members can rest easy in the assurance that their savings are safe. Credit unions in Ireland, which are affiliated to the Irish League of Credit Unions, are secured in several ways:
- All officials of credit unions, whether volunteers or staff, must be fidelity bonded.
- All monies received in the credit union are properly recorded.
- Full financial statements are prepared and can be examined by members.
- Deposit Guarantee Scheme – Individual members’ savings are guaranteed up to €100,000 per member.
- Wexford Credit Union is regulated by the Central Bank of Ireland
The Deposit Guarantee Scheme
In general, the Deposit Guarantee Scheme (DGS) protects deposits belonging to individuals, companies, partnerships, clubs and associations. It excludes public authorities, insurers, pension funds, collective investment schemes, banks and certain other financial institutions.
The Irish DGS covers deposits in branches of credit institutions authorised in Ireland. You do not have to be resident in Ireland or be an Irish citizen to be eligible for DGS compensation.
A deposit means a credit balance on an account with a bank, building society or credit union that must be fully repaid.
The following is a list of deposit types that may be considered eligible for Deposit Guarantee Scheme (DGS) compensation:
- Current accounts
- Saving accounts
- Demand deposit accounts
- Notice deposit accounts
- Fixed-term deposit accounts
- Share accounts in a building society or credit union
- Deposit element of structured deposits/tracker bonds may also be eligible if the deposit element is repayable at par
Compensation payments will be based on details of eligible depositors and their accounts provided to the Deposit Guarantee Scheme (DGS) by the liquidator of the defaulting credit institution. The maximum amount of compensation from the DGS will be €100,000 per person per credit institution. Compensation will be based on the balance held in accounts on the date that the liquidator was appointed and will include any interest due on this date. All balances held in the depositor’s name (including balances held in a joint account or in a beneficiary account) will be aggregated and one compensation payment will be issued to the depositor for the total of all their deposits.
Mortgages & Loans
As a general rule, liabilities such as mortgages and overdrafts are not set off against deposits when calculating DGS compensation. The liquidator, where entitled to do so, may set off arrears
Joint Accounts
As a general rule, joint account balances will be divided equally between each account holder, unless another arrangement is in place for the account. The amount each account holder receives in respect of a joint account will be aggregated with any other balances held by that account holder. The maximum amount of compensation from the DGS will be €100,000 per person
Foreign Currency Accounts
Compensation payments will be denominated in euro. If a depositor holds a foreign currency account the account balance will be converted to euro using the reference exchange rates applicable on the day of appointment of the liquidator
Temporary High Balances
The maximum amount of compensation payable by the DGS is €100,000 per person per credit institution. In addition certain deposits, known as temporary high balances may qualify for compensation in excess of €100,000. For a deposit to qualify as a temporary high balance it must stem from at least one of the following:
- deposits resulting from real estate transactions relating to private residential properties
- deposits that serve social purposes laid down in national law and are linked to particular life events of a depositor such as marriage, civil partnership, divorce, retirement, dismissal, redundancy invalidity or death
- deposits that serve purposes laid down in national law and are based on the payment of insurance benefits or compensation for criminal injuries or wrongful conviction
Qualifying deposits are protected up to a limit of €1 million (although unlimited cover is provided for claims relating to personal injury) for a period of 6 months after the deposits have been credited to an account or from the moment when such deposits become legally transferable.
For more information click HERE to visit the Deposit Guarantee Scheme website.
