OTTAWA, Canada—Canada’s credit unions are protesting a decision by the country’s regulator prohibiting them from using the words “bank,” “banker” and “banking” in any of their messaging.
Canada's Office of the Superintendent of Financial Institutions has issued an advisory that restricts the use of those words by non-bank financial service providers. The ruling is a strict interpretation of the country’s Bank Act, and means the federal regulator could bring federal charges against any credit union that uses bank, banker or banking in any way. Credit unions in Canada are provincially regulated.
The Canadian Credit Union Association was sharply critical of the announcement.
“Ottawa is telling credit unions to stop using the words Canadians use to describe the work we do,” said Martha Durdin, CCUA’s president and CEO. “This rule will prevent credit unions from advertising their ‘business banking’ services or even having an ‘on-line banking’ button on a website. Having to create and popularize new words is an unnecessary and expensive undertaking, and will make it difficult for credit unions to compete fairly with banks.”
Durdin said the CCUA is estimating the total cost to Canada’s credit unions would be about $80 million to make the change.
Like the United States, credit unions have been operating in Canada since 1908 and have been using the now-prohibited words for much of their existence.
The Canadian Credit Union Association is calling on the federal government to reverse OSFI’s advisory, which the CCUA said could be done by changing the Bank Act or introducing a regulation to allow credit unions to continue to use the words without facing criminal penalty.
Manitoba’s credit unions issued a statement saying CUs in the province will incur high costs and create confusion among their members as a result of the new rule.
Garth Manness, president and CEO of Credit Union Central of Manitoba, told the Winnipeg Free Press that CUCM officials don’t have an exact estimate of how much it would cost the province’s credit unions to remove those words from their websites, their signage and all of their marketing and printed materials, but it would be in the millions of dollars.
Under the current proposal, the OFSI is giving non-banks time to comply with the new rule and has established timelines for websites, print materials, and physical signage to come into compliance.
The OSFI directive is currently set to take effect in stages, with companies required to remove banking references from websites by the end of 2017 and from printed materials by June 30 of 2018.