Lakeland Credit Union response to federal ban on term “bank”.
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,” explains Brian Thorne, CEO at Lakeland Credit Union. “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 to compete fairly and without the fear of facing criminal penalty”. Thorne goes on to say, “We will have to remove all reference to the verbs ‘bank and banking’ in our digital communications by end of this year. We don’t believe that asking our members to click ‘online credit union-ing’ makes much sense when everyone knows ‘on-line banking’.”
Credit unions have used the verb “bank” and the term “banking” to describe what they do, without penalty, for years with the unstated support of federal officials.
“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.”
Lakeland Credit Union provides the full complement of financial services that banks do in addition to annual generous profit sharing with its 10,000 local members. Setting aside more than 1.5% of pre-tax profit to reinvest in the Lakeland through community programming, hundreds of thousands of dollars are ear-marked for non-profit associations, community initiatives and financial literacy programs for all ages each year. That might not sound like a bank, but it’s what we do.