Credit unions will get right to continue using banking terms, says Finance Minister Morneau
Finance Minister Bill Morneau has signalled that credit unions will be allowed to continue using the terms bank, banker and banking to describe their activities.
Morneau said his department has worked with the Canadian Credit Union Association (CCUA) to reach an agreement that will let credit unions “continue using terms that make sense.”
Answering questions at the House of Commons Standing Committee on Finance on Wednesday, (at the 16:57.15 mark) Morneau said talks are continuing and no date has been set for a formal announcement.
On June 30 the Office of the Superintendent of Financial Institutions (OSFI) said it was going to restrict credit unions from using the terms because customers might think they were dealing with a federally regulated bank.
After a chorus of complaints from the credit union system and nationwide lobbying of Liberal MPs, the Finance Minister said on August 11 that OSFI would put that new tougher policy on hold while it was reviewed.
The original advisory from Carolyn Rogers, OSFI’s assistant superintendent, Regulation Sector, says only federally regulated organizations can use those words and set out deadlines for credit unions to change their current practices: Dec. 31, 2017 for websites, print materials by June 30, 2018 and physical signage by June 30, 2019.
Restrictions on use of the word bank have been in place since 1880, with many amendments over the years. Credit unions don’t want to call themselves banks, or bankers, but argued that banking is a common verb to describe the activities they carry out.
On July 20, in a meeting with CCUA representatives, Morneau agreed to find a resolution that would work for both the government and credit unions.
The federal government addressed the Bank Act restrictions in a consultation paper released in August as part of a review of its federal financial services framework.
Following the release of the consultation paper, OSFI published a notice saying it was “suspending the compliance expectations set out” in the June 30 advisory.
On Oct. 23 Dan Albas, (Conservative MP for Central Okanagan — Similkameen — Nicola, BC) introduced a private member’s bill that would authorize the use of the words bank, banker and banking by credit unions and caisse populaires that are provincially regulated.
At the finance committee on Wednesday, Albas asked Morneau if he would support the bill. Morneau responded that consultations are continuing and “I’m not sure that the bill will be necessary.”
Later Wednesday, Albas tweeted: “He seems content with the current consultation and didn’t indicate a timeline. I will continue to advocate for common sense & certainty for CUs!”
Kevin Dorse, CCUA’s Deputy Director of Government Relations tweeted: “A positive signal by @Bill_Morneau towards a common sense solution that will allow the continued use of the verbs “bank” and “banking” by credit unions.”
Read more about the background of this dispute in this Enterprise magazine feature Word Games.