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Credit Union Consumer Code

March 6, 2018

Marc-Andre Pigeon, AVP, Government Relations, Canadian Credit Union Association

Last summer, CCUA started work on an inventory of provincial market conduct rules in support of credit union advocacy on anticipated provincial (and federal) reviews but also more ambitiously, to propose a principle-based national credit union consumer code.

This is necessary because, prior to the 2008 financial crisis, as a Bank for International Settlement study noted, “consumer protection was viewed through a narrow prism of safety and soundness of the financial entities. If the financial institutions could remain solvent, consumer protection could be ensured.” (K C Chakrabarty, “Regulation for financial consumer protection – present status and future directions,” available at http://www.bis.org/review/r130506a.pdf). This is no longer true. In the wake of the financial crisis, the U.S. Wells Fargo scandal and “upselling” reporting in 2017, federal and provincial governments are on the case.

A voluntary code has been a core element of the regulatory framework in Saskatchewan for more than a decade now, and has been proposed by British Columbia credit unions as part of their legislative review. It’s also a reality in at least one U.S. state. Our proposed national consumer code took on greater weight this week as the federal government announced in Budget 2018 that it would amend the Bank Act to enable credit unions to use the words “bank, banker and banking” but only subject to disclosure (likely in the form of regulation). There is reason to believe the federal government would be supportive of integrating this unspecified “disclosure” requirement into our proposed national code.

CCUA’s work on the code is well underway and in the coming weeks and months, CCUA will be reaching out to credit unions for their input into the code and the “bank banking” disclosure requirements as well providing the system with regular progress updates. We will also continue to update the system on regulatory developments, including, for example, the anticipated unveiling of a new federal consumer code for bank and federal credit union customers/members, possibly as soon as this month.