Whatever you do, don’t use the B word

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

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.