On January 15, CCUA formally submitted a response to the capital rule consultation. CCUA convened a working group of credit union experts to inform the development of the submission. CCUA was directed by the working group to ensure the timely implementation of the new capital rule as the framework is, in the near term, more favourable to the collective capital adequacy position of the credit union system when compared to the current framework.  

CCUA has flagged both to BCFSA and the Ministry of Finance areas of concern for the sector, particularly with respect to the inclusion of new credit risk metrics, specifically TDS, Amortization Period, and DSCR. These new metrics introduce significant operational and reporting considerations for B.C. credit unions. While these metrics are intended to enhance the risk sensitivity of the capital framework, they depart from the OSFI framework and impose requirements not currently applicable to federally regulated institutions. 

CCUA is advocating for BCFSA to undertake an annual review of the capital rule to ensure the capital rule is appropriate going forward from both a competitiveness lens as well as from a macroeconomic lens allowing credit unions to continue to lend to British Columbians in times of need. 

Both Ministry of Finance and BCFSA are supportive of this review and have verbally committed to undertaking it annually or triggered through changes to OSFI’s capital requirements or material changes in the economic environment. Ministry of Finance has signalled the sectors support of the rule as critical in receiving approval from the Minister of Finance.