{"id":265759,"date":"2017-12-05T11:32:25","date_gmt":"2017-12-05T16:32:25","guid":{"rendered":"https:\/\/policyoptions.irpp.org\/issues\/credit-unions-and-the-term-banking\/"},"modified":"2025-10-07T21:53:44","modified_gmt":"2025-10-08T01:53:44","slug":"credit-unions-and-the-term-banking","status":"publish","type":"issues","link":"https:\/\/policyoptions.irpp.org\/fr\/2017\/12\/credit-unions-and-the-term-banking\/","title":{"rendered":"Credit unions and the term \u201cbanking\u201d"},"content":{"rendered":"

John Chant\u2019s Policy Options<\/em> piece, \u201cOSFI must be independent<\/a>,\u201d offers some good observations; however, it is disadvantaged by a number of unfortunate misunderstandings about credit unions\u2019 recent interactions with the federal banking regulator around the use of the terms \u201cbank,\u201d \u201cbanking\u201d and \u201cbanker.\u201d I\u2019d like to take this opportunity to help clarify these misunderstandings.<\/p>\n

As co-operatively owned, provincially regulated, deposit-taking institutions, credit unions occupy a unique space in the financial marketplace. For decades we have used forms of the verb \u201cto bank\u201d to help Canadians identify what are the only other banking choices available to them besides the Big Six global banks. We\u2019ve used these terms on websites that say \u201con-line banking.\u201d We\u2019ve used them on advertising that says \u201cBank with XYZ credit union.\u201d<\/p>\n

For many decades, these practices have generated zero red flags from the Office of the Superintendent of Financial Institutions (OSFI). That\u2019s because credit unions have used the verb in the same way Canadians do: to describe their day-to-day interactions with a credit union \u2014 and because of the many ways credit unions differentiate themselves from the big banks.<\/p>\n

So it was surprising that OSFI issued an advisory in June ordering credit unions and other nonbanks to stop using these verbs. This leads me to an important issue the article gets wrong.<\/p>\n

Credit unions are not objecting to restrictions on the use of \u201cbank\u201d as a trade name \u2014 we do not wish to be known as \u201cbanks.\u201d This has always been off-limits in the eyes of credit unions, Finance Canada and OSFI. So while we do not want to be confused with banks, we do want to be able to use the common terms that Canadians use, to ensure the public understands the services we offer and to retain some ability to compete in a market that is dominated by global big banks.<\/p>\n

The idea that Canadians might have been confused by the use of the terms has been an important public policy concern. That is why Parliament saw fit to include the restrictions on the use of the terms, even before the Bank Act<\/em> came into existence more than 100 years ago. Scholars who have looked at the history of these restrictions have concluded that the rule was put in place to address the use of the terms \u2014 especially in names and titles \u2014 by unregulated financial institutions, which credit unions are not.<\/p>\n

However, there is no evidence that Canadians are confused. A recent Senate study<\/a> concluded that \u201caccording to Finance Canada and OSFI, there have been no complaints or other examples of misunderstanding among consumers about the use of these terms.\u201d<\/p>\n

Telling credit unions not to use the phrases \u201con-line banking\u201d or \u201ccommercial banking\u201d is more likely to create misunderstanding. New Canadians and people who are unfamiliar with credit unions would have more trouble identifying their local credit union branch as a well-regulated, deposit-taking institution where they can safely do their banking, and this may undermine credit unions\u2019 ability to attract members and provide real competition to the big banks.<\/p>\n

This brings me to an important point the article gets right. The government sets financial policy, and OSFI enforces it. The reason so many Canadians and ultimately the minister of finance raised concerns about the June advisory<\/a> was because it represented a departure from OSFI\u2019s own common-sense enforcement over many decades of restrictions on the noun \u201cbank,\u201d and all the best legal opinions on the matter. With no public consultation and no evidence of public misunderstanding, the regulator effectively reinterpreted the Bank Act<\/em> and with it Parliament’s intent \u2014 which was to prevent unregulated financial institutions from deliberately misleading Canadians.<\/p>\n

In August, Finance Minister Bill Morneau rightly opted to move the whole question into the financial institutions framework review. Rather than \u201cpolitical interference,\u201d as John Chant suggests, this decision is a proper demonstration of the Minister\u2019s authority to set policy.<\/p>\n

It is now up to the Minister of Finance to consider amending the Bank Act<\/em> to make it clear that credit unions can continue to use the verb \u201cto bank\u201d and the term \u201cbanking\u201d to describe the services we offer Canadians.<\/p>\n

Photo: Shutterstock, by\u00a0Julia Tim.<\/span><\/p>\n

\n

Do you have something to say about the article you just read? Be part of the\u00a0<\/em>Policy Options\u00a0discussion, and send in your own submission.\u00a0Here is a\u00a0<\/em>link<\/em><\/a>\u00a0on how to do it. <\/em>|\u00a0Souhaitez-vous r\u00e9agir \u00e0 cet article ? <\/em>Joignez-vous aux d\u00e9bats d\u2019<\/em>Options politiques\u00a0et soumettez-nous votre texte en suivant ces\u00a0<\/em>directives<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

John Chant\u2019s Policy Options piece, \u201cOSFI must be independent,\u201d offers some good observations; however, it is disadvantaged by a number of unfortunate misunderstandings about credit unions\u2019 recent interactions with the federal banking regulator around the use of the terms \u201cbank,\u201d \u201cbanking\u201d and \u201cbanker.\u201d I\u2019d like to take this opportunity to help clarify these misunderstandings. As […]<\/p>\n","protected":false},"featured_media":255713,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false,"apple_news_api_created_at":"2025-10-08T01:53:47Z","apple_news_api_id":"fdb772cc-f79e-4b55-938a-8c5bd70e4bbc","apple_news_api_modified_at":"2025-10-08T01:53:47Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/A_bdyzPeeS1WTioxb1w5LvA","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false},"categories":[9362,9358,9372],"tags":[8380],"article-status":[],"irpp-category":[4245,4295],"section":[],"irpp-tag":[7084],"class_list":["post-265759","issues","type-issues","status-publish","has-post-thumbnail","hentry","category-economie","category-politique","category-recent-stories-fr","tag-banks-fr","irpp-category-economie","irpp-category-politique","irpp-tag-banques"],"acf":[],"apple_news_notices":[],"yoast_head":"\nCredit unions and the term \u201cbanking\u201d<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/policyoptions.irpp.org\/fr\/2017\/12\/credit-unions-and-the-term-banking\/\" \/>\n<meta property=\"og:locale\" content=\"fr_FR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Credit unions and the term \u201cbanking\u201d\" \/>\n<meta property=\"og:description\" content=\"John Chant\u2019s Policy Options piece, \u201cOSFI must be independent,\u201d offers some good observations; however, it is disadvantaged by a number of unfortunate misunderstandings about credit unions\u2019 recent interactions with the federal banking regulator around the use of the terms \u201cbank,\u201d \u201cbanking\u201d and \u201cbanker.\u201d I\u2019d like to take this opportunity to help clarify these misunderstandings. 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