The Financial Regulator, which polices the sector, stepped in on Thursday to ban credit unions from investing more of their money in bank bonds that will not mature for ten years or more.

The ban, which takes effect from 1 November, also limits the proportion maturing after seven years to no more than 30% of a credit union's bond portfolio.

According to the regulator, the new rules support the principle that "investments by credit unions must not involve undue risk to members' savings".

But the crackdown may have come too late for some credit unions which, according to accountant Robert Moynihan, have already lost heavily. He sits on an industry panel set up by government to advise the Financial Regulator and also provides training services for the Irish League of Credit Unions.

Moynihan claims that credit unions, which rely heavily on unpaid volunteers to manage their affairs, may be the victims of a misselling scandal. He wrote to more than 400 credit unions earlier this month, seeking their support for a campaign to win compensation from the investment advisers that sold the bonds.

According to Moynihan's letter: "Six credit unions have told me that their holdings in certain bonds have suffered losses which amount to more than 1m, reflecting a fall in value of around 10%12%. It is likely that across the credit union movement total losses amount to many millions of euro.

"This calls for an investigation into the conduct of the investment advisers concerned because, if the losses are the result of misconduct on their part, credit union members should not bear the cost of the pain."

Moynihan said his aim was "to force your investment adviser to buy the bonds back at the lower of face value or cost, although alternative forms of compensation cannot be ruled out".

He said that, when the Financial Regulator's new rules take effect this week, credit unions will no longer be able to invest in the bonds in question.

"Credit unions both want and need investments which carry a guaranteed return of their investment at a fixed maturity date, and perpetual bank bonds do not provide this critically important feature, " he said.

A spokeswoman said the Financial Regulator "is aware of the matter and is looking into it".

Davy Stockbrokers, which manages 2.3bn for credit unions affiliated to the ILCU, said any losses that might have been incurred were due to temporary market fluctuations affecting a small number of bonds.

A statement issued to the Sunday Tribune said: "Davy is adviser to a large number of credit unions who have broad-based portfolios for their excess liquidity. This particular high-yield product is a very small part of these portfolios . . . 5% or less. The product is below par at the moment because the market for long-dated products is lower than for short-dated products. Credit unions are aware of this and not one single complaint has been received by Davy in relation to this product."

Its position was backed by Liam O'Dwyer, chief executive of the ILCU, in a memo sent to credit unions two weeks ago in response to Moynihan's allegations. It stated: "Although bond values are subject to market fluctuations, each bond. . . on the advice of the league's investment advisers, Davy, should continue to deliver strong income in the future, thereby meeting credit union income requirements."

He told the Sunday Tribune that "we've have a look at the matter and we're comfortable that credit unions are secure".

O'Dwyer's memo rejects any implication that the bonds had broken investment regulations, although these regulations have now been replaced by the new rules issued by the Financial Regulator on Thursday.