What­ever you do, don’t use the B word

De­spite ridicu­lous new rules, you can bank on credit unions to keep do­ing good work

The Hamilton Spectator - - COMMENT - Sandy Shaw is a char­tered di­rec­tor with ex­per­tise in the credit union sec­tor. She was elected as the first and only fe­male board chair for FirstOn­tario Credit Union and was re­cently ap­pointed by the City of Hamil­ton to serve on the Hamil­ton Port Author­ity

With tril­lions of dol­lars in as­sets and yearover-year record prof­its, Canada’s Big 5 banks, RBC, TD, Sco­tia­bank, BMO and CIBC, en­joy a vir­tual monopoly on bank­ing. But thanks to a re­cent fed­eral rul­ing, they will now have a monopoly on the word “bank.” On June 30, as most Cana­di­ans were prepar­ing for a long week­end of Canada 150 cel­e­bra­tions, the Of­fice of the Su­per­in­ten­dent of Fi­nan­cial In­sti­tu­tions (OSFI) qui­etly is­sued an ad­vi­sory that bans Canada’s credit unions from us­ing the words “bank,” “bankers” or “bank­ing.”

Ot­tawa is crack­ing down on any vari­a­tion of the word bank, whether it is used as a verb or a noun. Credit unions could face crim­i­nal charges and fi­nan­cial penal­ties for us­ing terms such as Bank Ma­chine, Mo­bile Bank­ing, Tele­phone Bank­ing, Branch Bank­ing and even Bank Ac­counts. Credit unions are now re­quired to re­code all of their web­sites to re­move On­line Bank­ing buttons.

The feds are de­fend­ing this sur­prise an­nounce­ment as a nec­es­sary ac­tion to pro­vide clar­ity in the fi­nan­cial sec­tor. Their con­cern seems to be that con­sumers may be con­fused or mis­led into be­liev­ing that they are deal­ing with one of the Big 5 when they be­come mem­bers of a credit union where the word bank is be­ing used. For the na­tional Cana­dian Credit Union As­so­ci­a­tion and many credit union mem­bers, this is a thin ar­gu­ment for a move that will cost mil­lions and that will fur­ther erode an al­ready un­even com­pet­i­tive play­ing field.

Credit unions have been op­er­at­ing in Canada for over 100 years and hap­pily us­ing the bank­ing word to de­scribe the ser­vices they pro­vide. Hamil­to­ni­ans share in this long his­tory of credit unions. In 1939, our steel­work­ers cre­ated the Stelco Credit Union, which formed part of what is now FirstOn­tario Credit Union, one of the largest credit unions in On­tario.

You have to won­der if it is re­ally plau­si­ble that Canada’s 5.6 mil­lion credit union mem­bers are con­fused by their choice of fi­nan­cial in­sti­tu­tion. Or is it more likely that peo­ple are in­ten­tion­ally choos­ing credit unions as a re­fresh­ing al­ter­na­tive to the big banks. The fun­da­men­tal credit union dif­fer­ence is a fo­cus on peo­ple, not prof­its. All of the prof­its of a credit union are dis­trib­uted to their mem­bers and re­main in the lo­cal econ­omy. Credit unions are re­spon­si­ble to their mem­bers and not to cor­po­rate share­hold­ers. You can demo­crat­i­cally vote to elect your credit union board of direc­tors and have a say in how your credit union is op­er­ated.

A cynic may feel that this far-reach­ing move is a suc­cess­ful ef­fort by the pow­er­ful bank­ing lobby, which per­haps does not like credit unions nip­ping at its heels. But you don’t need to be a credit union mem­ber to en­joy this irony: The Big 5 are cur­rently de­fend­ing their busi­ness prac­tices at a par­lia­men­tary com­mit­tee, af­ter be­ing ac­cused of ques­tion­able sales meth­ods that in­duce clients into credit-card lim­its and mort­gages be­yond what they can re­al­is­ti­cally af­ford.

This will be costly for credit unions, with early es­ti­mates of $80 mil­lion to re­move all bank­ing words from web­sites, mar­ket­ing and printed ma­te­ri­als and phys­i­cal sig­nage. That’s money that will not go into the pock­ets of av­er­age Cana­di­ans and small busi­ness own­ers. And there will be less money avail­able to sup­port im­por­tant ini­tia­tives that ben­e­fit com­mu­ni­ties. In 2015, credit unions contributed more than $56 mil­lion to ini­tia­tives that im­proved the qual­ity of life for mem­bers and com­mu­ni­ties at large. In Hamil­ton, credit unions have sup­ported mi­cro-lend­ing for women, stu­dent nutri­tion pro­grams and fi­nan­cial lit­er­acy for youth. Merid­ian has a doc­u­mented pol­icy to in­vest a min­i­mum of 4 per cent of pre-tax earn­ings into our com­mu­ni­ties.

While this fed­eral bat­tle of words may seem ridicu­lous, there is noth­ing funny about this se­ri­ous mis­use of money and re­sources. Is this re­ally the big­gest risk fac­ing Cana­dian con­sumers? Fi­nance Min­is­ter Bill Morneau is ul­ti­mately re­spon­si­ble, and he alone has the author­ity to walk this back.

Com­pared to the banks, credit unions may be small but they have had a mighty im­pact. Af­ter all, they were the first to bring a full-ser­vice ATM net­work to Canada. They may be able to turn this into a pos­i­tive sit­u­a­tion. There is lots of fun to be had imag­in­ing a new way to de­scribed their ser­vices, such as “credit-union­ing” and re­cent play-on­word hash­tags like “I bank with a credit union.” This may in fact en­cour­age Cana­di­ans to con­sider their lo­cal credit union — just don’t use the B-word.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.