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Credit unions call for consultation on reporting standard
Credit unions yesterday called for consultation/conversation before the International Financial Reporting Standard (IFRS) 9 is implemented in January 1, 2018.
Group chief executive, Eastern Credit Union Co-operative Society Ltd (ECU), Conrad Enill said yesterday that no one has consulted with the credit unions, and the IFRS 9 once implemented, has repercussions for the way credit unions do business such as granting of loans.
"We believe that we did not have sufficient time from the regulatory bodies, to put in place things that we may need to put in place.
"Normally when you have this type of far reaching type of change, there is usually consultations and there is usually some kind of conversation around what we are doing now (the seminar), so we can change to meet the new standard."
The IFRS 9, according to a circular letter issued by the Central Bank of T&T (CBTT) to all licensees who are listed under the Financial Institutions Act, 2008 and the Insurance Act, " introduces an expected loss impairment model and will replace International Accounting Standard 39-Financial instruments, which recognises the impairment of financial assets using an incurred loss model."
The ECU yesterday held a Breakfast seminar at its St Joseph headquarters to discuss the potential impact of this new standard on transactions done in credit unions.
Enill said it was important to discuss the standard as it would impact the way that credit unions do business.
According to the CBTT, credit unions are responsible for $13.8 billion in assets and have about 560,000 members.
Enill added that if someone visits a credit union and applies for a loan, it is no longer the decision of the credit union only, to determine whether the individual gets the loan.
"I (the credit union officer) have to figure out, do you (the credit union member) have the ability to pay. I also have to figure out what is happening with the economy. Is it in the next year or two will you still have a job and still be able to pay your loan?"
Enill explained, "I will have to develop a way I can look at the future externally, determine how it is going to impact you, and then make the decision to give you the loan. That is going to fundamentally change the way we do business because that's not the way we were structured."
Enill said credit unions are being asked to operate as though they are banks.
Credit unions he said, are institutions which look at the ordinary citizen on a case by case basis, and try to gather resources together and make it available to the member at a cost that the member can afford to repay.
He added now that IFRS 9 standard is being enforced it challenges the role credit unions play in making capital available to the ordinary citizen.
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