Toronto, ON (July 4, 2017) – The national association for Canada’s credit unions, Canadian Credit Union Association (CCUA), has sharply criticized the decision by the federal bank regulator to ban credit unions from using the term “banking” to describe the services they offer Canadians.
“Ottawa is telling credit unions to stop using the words Canadians use to describe the work we do,” said Martha Durdin, CCUA’s president & CEO. “This rule will prevent credit unions from advertising their ‘business banking’ services or even having an ‘on-line banking’ button on a website. Having to create and popularize new words is an unnecessary and expensive undertaking, and will make it difficult for credit unions to compete fairly with banks.”
An advisory issued June 30 by the federal Office of the Superintendent of Financial Institutions (OSFI) takes a strict interpretation of the Bank Act. Based on this interpretation, the federal government could lay criminal charges against any credit union that uses the term “bank,” “banker,” or “banking”.
Provincially regulated, credit unions have operated in Canada since 1908 and have evolved to provide the same lending, deposit-taking and wealth management services as federally chartered banks. They have the same – or higher – deposit protection as banks, and operate in 380 communities that are not locally served by Canada’s largest banks. And credit unions have used the verb “bank” and the term “banking” to describe what they do, without penalty, for years with the tacit support of federal officials.
CCUA is calling on the federal government to reverse OSFI’s advisory, which it could do by signaling a change to the Bank Act or introducing a regulation to allow credit unions – as regulated, deposit-taking institutions – to continue to use these words without facing criminal penalty.
“OSFI has taken a position that is inconsistent with its past practices and with common sense,” said Ms. Durdin. “The Minister has the power to fix this so that Canadians continue to have a real competitive option to the big banks.”