A war of words is brewing between the federal government and credit unions over decades old legislation.
The Office of the Superintendent of Financial Institutions (OSFI) has released an advisory that it would begin enforcing regulations within the Bank Act.
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Those rules would restrict the use of key words like “bank,” “banker,” or “banking” by non-bank financial service providers.
“I’ve even seen some language that might suggest the word piggy bank might be prohibited,” said Eric Dillon, the CEO of Conexus Credit Union.
“So as you can appreciate, from our perspective it starts to get heavy handed and perhaps a bit draconian that a regulator for financial services thinks they can control the English language.”
According to a cover note released by OSFI with the advisory, “the restrictions apply to all non-bank financial service providers, including both federally regulated trust and loan companies and provincially regulated institutions. They also apply to unregulated financial service providers.”
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The OSFI’s website states it noticed an increase in the use of banking terms by non-bank financial service providers, and that jump prompted the restrictions.
Along with credit unions, it includes start-up tech companies that develop financial software.
“I think OSFI rightly so wants to make sure that those kinds of organizations aren’t advertising themselves as a bank,” Dillon said.
OSFI has organized the changes in stages. First, websites must be changed by the end of 2017, followed by print materials in June 2018, and signage by June 2019.
The re-branding within credit unions is expected to cost millions of dollars, but may not be mandatory.
“OSFI does not regulate provincial credit unions,” Dillon said.
“The provincial government regulates provincial credit unions and so they can’t force us to comply from a regulatory perspective.”
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Credit unions across the country are now reaching out to elected officials to plead their case; hopeful the restrictions are overturned by the federal government.
Global News reached out to the OSFI, but no one was available for an interview.