Tom Murray is just as confused as anyone that he can’t refer to his credit union as a bank.
The Nelson and District Credit Union CEO echoed the surprise of credit union employees across Canada on June 30 when the federal Office of the Superintendent of Financial Institutions (OFSI) issued changes to the Bank Act that restrict the words bank, banker and banking from being used by any organization not recognized as a financial service business.
That somehow, according to OFSI, applies to credit unions.
“We’d heard rumours it was possible [OFSI] was looking at this, but it wasn’t until just before it happened that we had any indication they were truly serious about trying to regulate the term bank,” said Murray.
Unlike a bank, credit unions are co-ops that funnel profits back into local communities. But it’s also a place people use to deposit and remove their money, which Murray said makes the OFSI decision a marketing hurdle for credit unions.
“The challenge we have is that bank and banking have become common terminology to describe what you do with a financial institution,” said Murray.
“For us as a credit union, we offer online banking as a service. So when we’re told we can’t use that term anymore, we’re left with well, what are we going to call it? Online transactioning?
“So we just think it’s kind of a bit of an unreasonable approach to regulation.”
The changes will also affect Kootenay Savings, another credit union with 11 branches including those in Castlegar, Kaslo, Salmo and at the South Slocan junction. Kootenay Savings CEO Brent Tremblay declined to speak with the Star, but echoed Murray’s disappointment in a statement.
Both organizations have until Dec. 31 to replace the banned words on their websites. The ban extends to printed materials on June 30, 2018 and to physical signage on June 30, 2019.
First started as the Nelson Savings Credit Union in 1950, the NDCU has branches in Nelson, Rossland and Crawford Bay, the latter two of which Murray pointed out don’t have any other financial institutions.
Martha Durdin, president of the Canadian Credit Union Association, said earlier this month that her organization estimates it will cost Canada’s credit unions $80 million to make the necessary changes.
Murray said it’s difficult to say now what the financial impact will be on NDCU. The real challenge, he said, will be in finding new ways to describe what it does.
“One of the terms we use here is bank local. To us that has meaning and we think it has meaning in our market place. I’m not sure what we would replace that with. We just find it an interesting approach from the regulator. It’s just going to make it more difficult for everyone to compete with banks.”