London News & Search
The president of Libro Credit Union said it will cost his customer-owned company half a million dollars to comply with a new federal crackdown on the use of terms like “bank” and banking.
But the alternative, says Stephen Bolton, is going to jail.
Bolton said Libro uses banking as a generic sense and has never pretended to be a chartered bank.
“We offer banking services but we do it differently and have no interest in being a bank. No one who has ever done business with us has thought they were using a bank and not a credit union,” said Bolton.
On June 30 the federal Superintendent of Financial Institutions warned it would start strictly enforcing a regulation in the Bank Act that only a select group of regulated financial institutions can use terms like “bank,” “banker” and “banking” in their marketing and promotion, drawing immediate protest from a national association of credit unions.
Credit unions will have until June 30, 2019, to completely phase out use of the terms on their signage, with earlier deadlines for websites and printed materials kicking in at the end of this year and next June.
London-based Libro, the dominant credit union in Southwestern Ontario and the third largest in Ontario, has used those terms in its ads and promotions, but Bolton said Libro will have to remove all references to banks and banking from websites, slogans, apps, promotional material and signage.
He said it will hard to find alternative language that would be readily understood and would show up in online searches.
“Banking is a verb and I’m not sure what other word we can use successfully,” said Bolton.
But he said that violating the Bank Act is a criminal offence and officers of a financial institution can be jailed for violations.
Bolton said he could not account for the sudden crackdown but officials from chartered banks have expressed concern about “fintechs” — startups that offer financial services online and through mobile devices such as smartphones.
There are also worries about “shadow banking” — unregulated companies that offer mortgages to people who have been turned down by traditional lenders.
Bolton said that he supports protecting consumers from unregulated companies, but said credit unions are tightly regulated.
Bolton noted the Bank Act will be up for review in 2019 and he does not understand why a review of the regulations could not wait until then.
“After all of these years why now? We have gone over 100 years with credit unions using banking as a verb,” said Bolton.
London News & Search