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A Market Conduct Code for Credit Unions

July 25, 2018

Nick Best, Communications Manager, Canadian Credit Union Association

What is this Market Conduct Code for Credit Unions?
With input from credit unions and centrals, the CCUA is drafting a baseline standard voluntary Market Conduct Code (MCC) for the credit union sector. The MCC is principles based and consolidates consumer protection measures into one document that builds on the credit unions’ commitment to delivering high quality service to members.

The MCC sets out standards to ensure that credit union members:

  1. have access to basic banking services;
  2. clearly understand the products and services being offered to them;
  3. are given statements and information about the products and services they have with their credit union;
  4. understand how their complaints can be heard and resolved; and
  5. have their personal information protected.
It also sets out standards to ensure that credit unions:
  1. act in the best interests of their members;
  2. use fair sales and business practices;
  3. and identify themselves as credit unions when using banking terminology.
Why is the CCUA creating a MCC for CUs?
The following background information helped inform the decision to create a MCC:
  1. The credit unions’ successful advocacy efforts on the use of bank/banking terminology are still subject to disclosure requirements;
  2. Some provincial governments have signaled the need for better consumer protection and will impose a code if credit unions do not voluntarily adopt one;
  3. The federal government recently proposed a Financial Consumer Protection Framework1, and
  4. There has been an increasing focus on consumer protection in the financial industry.
The CCUA is creating a MCC because:
  1. The MCC includes banking terminology disclosure requirements that can be used to help advocate against further federal regulation;
  2. Voluntary adoption of a MCC by credit unions will help avoid having one imposed by provincial governments or regulators;
  3. The MCC is like the federal Framework but tailored for provincial credit unions and will help them be competitive with banks on consumer protection.
  4. The MCC will show that credit unions are proactive in protecting their members from predatory and other unfair practices.
What does the MCC look like?
The MCC is based on the following seven principles:
  1. Access;
  2. Business Practices;
  3. Disclosure & Transparency;
  4. Complaint Handling & Resolution;
  5. Governance;
  6. Member Best Interest; and
  7. Privacy.
The MCC was drafted using provisions from the proposed federal Financial Consumer Protection Framework2 and Saskatchewan’s Market Code. It also incorporates recommendations from the Financial Consumer Agency of Canada’s (FCAC) Report on Best Practices in Financial Consumer Protection3 and Domestic Bank Retail Sales Practices Review4, and The World Bank’s Good Practices for Financial Consumer Protection5.

What is the review process for the MCC?
A draft MCC is being reviewed by credit union working groups from each province/region. Credit Union representatives are from all peer groups and either volunteered or were asked to participate in the working groups by their central Government Relations/Compliance teams. Feedback from the working groups is due October 15 and will be used to develop the final MCC.

How will the MCC be enforced?
We hope all credit unions will voluntarily adopt the MCC and that provincial regulators will monitor compliance similarly to what has been done in Saskatchewan. Discussion with provincial regulators is underway.

When will credit unions see the MCC?
The final draft of the MCC is expected to be introduced to the credit union system in December 2018.

What are the benefits of a MCC for credit unions?
The MCC will be differentiator for credit unions in the financial sector. It is voluntary in nature, it shows consumer protection coordination and consistency across the credit union system, and it can help credit unions avoid government regulation regarding the use of banking terminology.

How can I learn more about the MCC?
To learn more about the MCC, you can contact Chantelle Thompson, Legal Counsel, Compliance by email at cthompson@ccua.com or by telephone at 306-271-0408.

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1 Bill C-29, online: http://www.parl.ca/DocumentViewer/en/42-1/bill/C-29/first-reading
2 Bill C-29, online: http://www.parl.ca/DocumentViewer/en/42-1/bill/C-29/first-reading
3 https://www.canada.ca/content/dam/fcac-acfc/documents/programs/research-surveys-studies-reports/best-practices-financial-consumer-protection.pdf
4 https://www.canada.ca/content/dam/fcac-acfc/documents/programs/research-surveys-studies-reports/bank-sales-practices.pdf
5 2012 - http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/Good_Practices_for_Financial_CP.pdf and 2017 - https://www.worldbank.org/en/topic/financialinclusion/brief/2017-good-practices-for-financial-consumer-protection