Department of finance officials have verbally assured credit unions that sweeping new powers in the Credit Institutions Stabilisation Bill and the EU/IMF memorandum of understanding will not be used to restructure the sector, according to sources.

The officials are understood to have told the main credit union representative bodies, ILCU and CUDA, that the new legislation, which gives finance minister Brian Lenihan power to assert absolute control over financial institutions, was written with banks and building societies in mind. They said it would not apply to the community lenders, despite explicit provisions in the bill relating to them.

The assurances were in response to complaints from credit unions about a lack of consultation prior to the publication of the documents.

The Irish League of Credit Unions, which represents most of the credit unions in the country, confirmed that its board had a briefing in the department on the contents of the bill last Tuesday.

A spokesman for the department said action on the credit unions could not be ruled out, however. He said the bill and memo had to "cover all the bases" because the Financial Regulator had "expressed serious concerns" about the financial health of the credit unions in the past year. The regulator declined to comment.