East Kootenay Community Credit Union (EKC) and Kootenay Savings (KS) are united in their disappointment with the federal government for a recent ruling that bans credit unions from using the terms ‘bank, banker, or banking.’

On Friday, June 30, the Federal Office of the Superintendent of Financial Institutions (OSFI) issued an advisory that essentially banned credit unions from using the term “banking” to describe the services they offer Canadians. Their advisory takes a strict interpretation of the Bank Act and based on this interpretation; the federal government could lay criminal charges against any credit union that uses the term ‘bank, “banker, or “banking.’

“We are obviously disappointed in this decision. It goes against all elements of common sense and puts credit unions at a distinct disadvantage. Honestly, it is ridiculous,” explains Jean-Ann Debreceni, EKC Chair. “Our credit union has higher deposit protection than banks and offers the same financial services as federally chartered banks. This decision by OSFI makes it extremely difficult for our credit union, and for credit unions across this country, to compete fairly and without the fear of facing criminal penalty.”

Credit unions have used the verb “bank” and the term “banking” to describe what they do, without penalty, for the last 25 years credit unions have used this language. The rules of language are now being enforced.

“We are obviously disappointed in this decision. It goes against all elements of common sense, and puts credit unions at a distinct disadvantage,” Brent Tremblay, President and CEO of Kootenay Savings stated. “Our credit union has higher deposit protection than banks, and offers the same financial services as federally chartered banks. This decision by OSFI makes it extremely difficult for our credit union and for credit unions across this country, to compete fairly and without the fear of facing criminal penalty.”

“OSFI has taken a position that is inconsistent with its past practices and with common sense,” said Martha Durdin, President and CEO, Canadian Credit Union Association. “The Minister has the power to fix this so that Canadians continue to have a real competitive option to the big banks.”

“Kootenay Savings invests in our local communities and plays a key role in the economic development of our region,” stated Tremblay. “This ruling by OSFI will cost the Canadian Credit Union system millions of dollars. It is based on bureaucratic interpretation of wording in the Bank Act that was established in 1871 before credit unions even existed in Canada. This ruling flies in the face of logic and will cause confusion for financial services consumers,” he added.

In a recent statement, Kootenay-Columbia MP Wayne Stetski called the ruling “ridiculous” and urged Finance Minister Bill Morneau to quickly amend the regulations. “In my riding, credit unions give a significant amount of their profit back to their communities every year,” he said. “This unconscionable ruling will cost Canada’s credit unions $80 million meaning they’ll have less to give back.”

The first Canadian credit union was established in January 23, 1901. Credit unions still offer the same financial products and services and offer 100% deposit protection. Like banks, credit unions are heavily regulated. The difference is in the structure.

Credit unions are a co-operative, run on principles, using profits for the good of the owners (members) by returning profits back to the members and their communities. Credit Unions open in small communities, looking more at the social and community impact, unlike banks that close down unprofitable branches.

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