Let credit unions call what they do banking, MPs say
A new report by the House of Commons Standing Committee on Finance has urged the government to allow credit unions to continue to use the words bank and banking to describe what they do.
The report, which was tabled in the House on Dec. 8, notes the Canadian Credit Union Association’s (CCUA) argument that “credit unions have used the verbs “bank” and “banking” for decades to describe the core services offered such as deposits and loans, and to make Canadians aware of the options available to them.”
It recommended that the government: “Allow credit unions to use the verb “bank” or “banking”.”
On Dec. 11, CCUA Tweeted about the fact MPs from all parties are recommending credit unions can use the terms and said, “Thanks.”
The report, which followed extensive hearings on a number of topics, notes that CCUA says “a practical solution should be adopted through an amendment to the Bank Act that would exempt credit unions from the restrictions under Section 983 of the Act.”
In early November, Finance Minister Bill Morneau indicated his department had reached an agreement that will let credit unions “continue using terms that make sense.”
But he said talks were continuing and no date had been set for a formal announcement.
The issue, which has been bubbling behind the scene for years, came to the fore on June 30 when 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, the Finance Minister said on August 11 that OSFI would put that new tougher policy on hold while it was reviewed.
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 argue that banking is a common verb to describe the activities they carry out.
In July, Morneau told CCUA he would work 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.
Read more about the background of this dispute in this Enterprise magazine feature Word Games.