On June 30 of this year, credit unions across the country were notified by the Office of the Superintendent of Financial Institutions that to use the terms ‘bank’, ‘banking’ or ‘banker’ in relation to the service they offer was in contravention of the law.
Needless to say, credit union boards and directors were not happy at this news, and are somewhat perplexed as to why this is an issue.
“It’s based on the wording in the Canadian Bank Act established in 1871,” said Kootenay Savings CEO Brent Tremblay. “It was written before credit unions even existed. This is some bureacrat’s interpretation. It flies against common sense.
“We have to remove any reference to banking from our websites, all advertising and signage by next June.”
Tremblay says this will cost Kootenay Savings thousands of dollars, millions to credit unions across the country. He also says credit unions will be lobbying to have the order reversed.
Taking up the cause is Kootenay Columbia MP Wayne Stetski.
“Frankly, this is ridiculous,” Stetski said. “It is outrageous. Our credit unions are highly regulated and respectable institutions that shouldn’t be blocked from using the everyday words that best describe their services.”
“In my riding of Kootenay-Columbia, credit unions give a significant amount of their profit back to their community every year,” Stetski said. “This unconscionable ruling will cost Canada’s credit unions $80 million meaning they’ll have less to give back.”
Stetski said he has written Finance Minister Bill Morneau and urged him to quickly amend the regulations or the Banking Act to allow credit unions to use the verbs and adverbs that describe their business.
“The OSFI is supposed to work on behalf of Canadians by supervising the banks,” Stetski said. “And here they’re protecting the banks at the expense of Canadians.”
“This goes against commons sense, it goes against good management, and it goes against the interest of consumers,” Stetski said.
Tremblay says he is not sure what the penalties would be for a credit union to continue to use the terminology, but it would be a criminal offence.
“We do everything a bank does,” Tremblay said. “We provide the same products and services. I guess we could call it financial services, but the financial consumer knows it as banking.”