Wish I could focus on something else in my posts, but that isn’t likely until the OSFI ruling about credit unions begins to reflect the application of some common sense. So, am I opposed to OSFI in general? Nope! In truth, I appreciate their intent to keep my meagre financial assets safe. In sharp contrast, their ruling that will prevent credit unions from using the terms “bank”, “banker” and “banking” is a huge source of frustration for me. It is absolutely ridiculous. Or is it ludicrous?  I tend to get those terms confused . . . unlike the clarity I have regarding the difference between “banks” and “credit unions”. I never seem to get those confused.


NOTE: I haven’t heard of any credit union saying they want to (a) be known as a bank, or (b) be able to hang out a shingle indicating that’s what they are as an organization. Quite the opposite. The greater the distinction between banks and credit unions, the better.


Rather than clarifying something that doesn’t require clarification and preventing a problem that hasn’t seemed to exist since the first credit unions opened in Canada over 100 years ago, OSFI’s ruling is going to cost credit unions millions of dollars and in effect limit (or at least reduce) competition in the financial services sector. If anything, OSFI should want to (safely) increase competition so there isn’t such total domination by Canada’s major banks.


A bit of history:

  • The word “bank” came into usage in the 15th century and was derived from Old Norse (bakki), French (banc) and English (bench). At the time, financial transactions took place on a bench—hence “bank”.
  • The first Canada Bank Act came into force in 1871 (several centuries after the word “bank” was in use).
  • The current one was passed in 1991 with a requirement that it be reviewed every 5 years. This is the act that made it possible to restrict the use of words “bank”, “banker” and “banking”.
  • At that time, credit unions had been operating in Canada for over 80 years–separate and distinct from banks.

The current staff in OSFI did not draft the 1991 Canada Bank Act; however, they are in a position to interpret and reinforce it.

My understanding is that the Act has three main goals:

  1. Protecting depositors’ funds [credit unions have the same deposit protection as banks–even greater in some provinces]
  2. Insuring the maintenance of cash reserves [handled provincially for most credit unions across the country]
  3. Promoting the efficiency of the financial system through competition [seems like they’re missing the mark with their credit union ruling]

So why now? Has a new problem arisen with credit unions that wasn’t a cause for concern since 1991? If so, what is it?

Why is OSFI is choosing this time to exercise control of the words “bank”, “banker” and “banking”.

Someone needs to help me understand OSFI’s rationale for subjugating the use of bank words while trashing one of the Bank Act’s three goals!

Regardless of whether or not you’re a credit union member (or even know what one is), if you’re concerned about a federal regulatory body attempting to restrict the meaning and use of common words, please express that concern to your MP (yours can be found at https://www.ourcommons.ca/Parliamentarians/en/members) so he or she can pass on your concern to the Hon. Bill Morneu, Minister of Finance.

Let reason return and common sense prevail!

David Gouthro (a happy credit union member!)


[Seesaw graphic courtesy of David Gouthro, photos licensed by Shutterstock]

OSFI-A Regulator Out of Balance with Credit Union Members! [A]
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One thought on “OSFI-A Regulator Out of Balance with Credit Union Members! [A]

  • David, Thanks for the clearly articulated debate on a topic not many of us know about. Your analysis and commentary seem to make a lot of sense – so why? why now? what’s the problem they are trying to solve with this? how does this really impact the CU’s in the community?
    I appreciate your insights. Trump may be stretch – but – this type of unilateral govt type action seems to more prevalent in places like Turkey, Hungary, the Philippines, China and Russia.
    Keep the faith. Thanks for waving the flag on this in such a helpful way

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