A recent decision to change the way the Bank Act is interpreted and enforced has the potential to cost credit unions across Canada millions of dollars, says a statement from the Revelstoke Credit Union
The Office of the Superintendent of Financial Institutions (OSFI), issued an advisory on June 30 limiting financial institutions other than those governed by the federal Bank Act in their use of the words “bank, banking” and “banker.” The restriction has long been in the Bank Act, but never enforced, as the verb is commonly used by most people to describe their general financial activity.
The Canadian Bankers Association has lobbied OSFI to begin enforcing these restrictions with fines and legal action against those who are not compliant, specifically credit unions and financial technology start ups. A timeline has been established for the removal of the word ‘bank’ from websites, documents and signage that will begin to be enforced at the end of this year.
“Revelstoke Credit Union, and all credit unions across Canada, will be faced with some changes to the way it describes some of the services it offers,” the RCU said in its statement. “Fortunately, RCU does not use the word ‘bank’ on expensive signage, but will have to make changes to forms, documents, website and mobile platform.”
Aware of the imminent changes, Revelstoke Credit Union had already been in discussion with MP Wayne Stetski to deliver a message to federal Finance Minister Bill Morneau to prevent OSFI from enforcing these changes, the statement said.
“Credit unions across Canada have taken action also and will now seek to have the Bank Act changed, to remove the restrictions on the usage of a common verb,” it said. “The Canadian Credit Union Association, (CCUA) is encouraging credit union leadership across the country to keep pressure on their MPs to deliver their message.”
CCUA president Martha Durdin called it a case of “regulation versus common sense” in a July 2nd interview with The Globe and Mail.
Credit unions are in the business of banking, but with regulation coming at the provincial level. In BC, the Financial Institutions Commission (FICOM) regulates the same financial services as federally chartered banks offering even higher deposit protection to the citizens of BC.