Legal Determinants of Accountability of Credit Union Members

Abstract

The financial crisis of 2007-2009 has triggered the development of legal solutions aimed at reducing economic turmoil by, in particular, increasing the responsibility of shareholders of financial institutions for the failure of the latter. The solutions in question include, inter alia, procedures of forced restructuring of financial institutions and establishment of the level of the so-called MREL for them. Counted among these institutions are also credit unions, the legal situation of which entities shows a number of peculiarities. They operate not for profit, have a highly dispersed ownership structure and limited opportunities to raise capital and, above all, members of the credit union as a cooperative society play a dual role in it - both that of shareholders and one of service users (consumers). The Polish lawgiver has made national credit unions subject to the rules of forced restructuring and MREL despite their exclusion from the European law regulations in force in that respect and placed them within as many as two separate legal regimes under which the solutions can potentially be applied. The aim of the paper is to consider whether - taking into account the legal structure of Polish credit unions - the solutions adopted under the aforementioned regimes may actually serve to increase the responsibility of credit union members for the institutions they co-own, and looking in a broader perspective - whether and to what extent they can generally contribute to successful operation of credit unions. In pursuit of the goal, attempts were made to combine dogmatic research (with the employment of the verbal logic method) with an analysis of the functions of the legal norms aimed at achieving the desired economic effects, taking into account the values the credit unions adhere to - on a global scale - as cooperatives run "not for profit, not for charity, but to serve”, as their motto reads. Thanks to the considerations done it was ascertained that burdening Polish credit unions with MREL requirements has been, in fact, an inappropriate solution, inadequate both to the structure of their ownership funds and the goals for which these requirements were established, since the goals include, at the outmost, protection of union members as consumers, and not burdening them - as small shareholders – with the risk of the business conducted by the members to satisfy their own needs.