Restrictions on the use of the terms “bank”, “banker”, and “banking”

July 4, 2017 - On Friday, June 30, the Office of the Superintendent of Financial Institutions (OSFI) published an advisory that details their strict interpretation of Bank Act restrictions regarding use of the terms “bank”, “banker”, and “banking” by credit unions.

The Bank Act restrictions are meant to ensure that Canadians are not misled into believing they are dealing with a federally-regulated bank if that’s not the case. As a credit union system, we disagree with OSFI’s strict interpretation of the Bank Act. We believe the Bank Act is written in a way that allows credit unions to use the terms bank / banker / banking to describe our business which follows a traditional “banking” model – taking deposits, issuing loans, and helping members make sound investments. Until very recently, the federal government’s enforcement behaviour aligned with this interpretation.

We also dispute the premise that Canadians who bank with credit unions are misled into believing they are dealing with a federal bank. Credit unions and banks offer similar products and services. However, as cooperative financial institutions, credit unions are run for the members, by the members and focus on serving members and their communities. What’s more, profits go back to members, meaning that credit unions help Canadians hold on to more of their money.

We continue to believe the government should work towards a common-sense solution, one that aligns with commonly used and understood terminology and more than 100 years of credit union practice and – until recently – reasonable interpretation by the federal regulator, OSFI. Our national trade association, the Canadian Credit Union Association (CCUA), and Kindred leadership, will continue to advocate for a common-sense solution.

For additional information on this news, please click on the links below and stay tuned for updates on this issue as they become available.

OSFI Advisory

CCUA Response to OSFI Advisory

 

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