If your client has an account at a credit union, she might have to get used to some new terminology.
That’s because the Office of the Superintendent of Financial Institutions (OSFI) is cracking down on who gets to use the words “bank,” “banker” and “banking.”
The crackdown is part of Advisory 2017-01, which OSFI issued last Friday.
The advisory states that the above terms can’t be used by:
- federally regulated trust and loan companies,
- provincially regulated institutions, and
- unregulated financial service providers.
“OSFI has observed increased use of [these terms] by non-bank financial service providers,” says Carolyn Rogers, assistant superintendent of the regulation sector at OSFI, in the advisory’s cover note. She further explains that the advisory is meant to bring clarity to OSFI’s interpretation of the applicable restrictions and exceptions.
Ultimately, the Bank Act says those who use the terms without authorization are guilty of an offence. Exceptions apply when the terms are used in a context unrelated to financial services business.
The Canadian Credit Union Association (CCUA) doesn’t like the advisory one bit.
“This rule will prevent credit unions from advertising their ‘business banking’ services or even having an ‘online banking’ button on a website,” says Martha Durdin, CCUA’s president and CEO, in a release. “Having to create and popularize new words is an unnecessary and expensive undertaking, and will make it difficult for credit unions to compete fairly with banks.”
While the advisory is in immediate effect, the following deadlines account for a transition period:
|December 31, 2017||For information on websites or other electronic media|
|June 30, 2018||For information in print materials|
|June 30, 2019||For information on physical signage|
CCUA is calling on the federal government to reverse the advisory.
“OSFI has taken a position that is inconsistent with its past practices and with common sense,” says Durdin. “The [finance] minister has the power to fix this so that Canadians continue to have a real competitive option to the big banks.”