‘Watch out!’
Credit unions press for BOJ regulation to unleash more benefits for members
IMMEDIATE past president of Jamaica Co-operative Credit Union League (JCCUL) Lambert Johnson wants the Government to quicken its pace on the passing of the Credit Unions Act. The framework will bring credit unions under the supervision of the Bank of Jamaica (BOJ) and unlock new opportunities for the 25 players in the industry.
Johnson, who was speaking at the Jamaica Stock Exchange’s 19th Regional Investments and Capital Markets Conference, described the credit union movement as the “sleeping lion of the financial sector”, but noted that the long-delayed tabling of the Credit Unions Act has slowed the industry from competing on an “equal footing” with other financial institutions.
Conversations last had with the credit unions were that the Bill was to be tabled during 2023/2024 budget presentation, but when that did not materialise, the operators had high hopes of it being tabled during 2024/2025. However, there are fresh concerns from whispers throughout the industry that the Bill may once again be placed on the back burner.
It comes amid updates from the BOJ that credit unions should finally fall within the ambit of its regulation when the supervision structure for the nation’s financial sector is transitioned from sector-by-sector regulation to a “twin peaks” regulation model by the 2024/2025 fiscal year.
The new Twin Peaks model will see the Financial Services Commission (FSC) becoming a consumer protection and market conduct supervisor for financial entities while the BOJ will ensure the entities are financially sound as the prudential regulator. The BOJ has so far established a committee to help it navigate the intricacies of the transition.
“The discussions to be regulated by the BOJ have gone on for an exceedingly long time… more than 18 years, and we are now at the point where the statute is to be introduced, but other matters always seem to supersede it,” Johnson said
“Once we have that level playing field, I can tell you, Jamaica, watch out! The one million credit union members will get the service they truly deserve,” he added.
With BOJ’S supervision, credit unions opening foreign exchange accounts for its members, and faster clearing time for electronic transfers from other financial institutions will be just a few of the new products to be offered to the estimated one million credit union members across the 25 credit unions in Jamaica.
“We will be a part of the clearing houses, and what that will do is minimise the exorbitant fees credit unions have to pay to the banks to clear our cheques and to take our deposits,” Johnson said.
“These are the things that keep us back, and we are anxious for the BOJ to be our regulator. We are prepared, we have the IT infrastructure, the governance structure, and we have the people,” he added.
Johnson said although there was a time when industry players feared the BOJ would have been heavy-handed with its governance measures, after much dialogue, the operators have concluded that they have much more to gain from the BOJ’S supervision.
In addition to advances in its offering, BOJ’S oversight will bring with it protection for credit union members under the Jamaica Deposit Insurance Corporation (JDIC). JDIC was created by the Government of Jamaica to protect depositors and promote stability and confidence in Jamaica’s financial system. It insures deposits up to $1.2 million per depositor for each qualifying account ownership category.
“But don’t be fooled, not because we are not there means our credit unions are exposed,” Johnson said.