The operation of Ontario’s credit unions has been governed by the same set of rules for over 25 years, and the banking industry has changed a lot in that time period. So time for an update? The Government of Ontario thinks so, and on Friday morning in Guelph, the Parliamentary Assistant for the Minister of Finance announced that change is coming.
The changes to the legislation, the 1994 Credit Unions and Caisses Populaires Act, will make credit unions more competitive in the new era of digital banking, said Stan Cho at the announcement at Meridian’s Speedvale branch. “When the credit union legislation came into effect in 1994, the industry and the world was very different,” Cho explained. “Since then, Ontario has adapted to new economic realities, but the credit union legislation simply hasn’t kept pace.”
The changes to the act will include a reduction in the “regulatory burden” of credit unions, an expansion in the types of business opportunities and services that they’re allowed to offer, and the adaptation of the Market Conduct Code, which will now be officially enshrined in the legislation.
According to Cho, these changes will “make sure credit unions can be more agile and competitive in the global economy while continuing to meet the needs of their members and the communities that they serve.”
“What we’re trying to do is be at a level playing field with the banks, who are able to deliver different financial services in their branches, and are able to invest in them in a way we can’t, or that were restricted from delivering,” said Michael Ras, the director of government and stakeholder relations for Meridian.
“We’re realizing more and more that we’re becoming more sophisticated financial institutions, especially when you get to the size and scale of Meridian with 92 branches across the across the province,” Ras added. “We want to be able to compete on a more equitable basis with the banks.”
Ras says that the changes in the law will not have a surface effect on your neighbourhood credit union, though they could eventually yield cost savings that could be transferred to members. “There could be new services that we’ll be offering, and new innovative financial products that we’ll be offering, and that will be helpful, but it’s going to be up to the individual credit unions as to which businesses they want to get into, and how and why they build from there,” he added.
Cho said that these reforms were a top priority when he took over as the parliamentary assistant in June, and there was a consultation process held with the representatives from Ontario’s various credit unions throughout the fall. “The goal was to find out how the legislation can better reflect the needs and expectations of the sector, and the needs those people and the communities who rely on these institutions,” Cho said.
Guelph MPP Mike Schreiner joined Cho for the announcement and endorsed the proposed changes. “I advocated to the previous government for the need to modernize the act, reduce the regulatory burden, and expand the services that credit unions and caisses populaires can provide,” Schreiner said.
Support Conservative legislation though? “We have lots of opportunities to battle each other in the House, but it’s nice to have an opportunity to work together across party lines and do what’s right for Ontario and Ontarians, and modernizing this act is exactly that,” Schreiner added.
Cho, who’s also currently touring the province to get feedback on the 2020/21 Ontario Budget, wasn’t sure when these changes might be formalized by the Legislature, but the wait shouldn’t be too long.
“I’ve already made these recommendations to the Minister, and his staff is reviewing them as we speak, and I expect that we will move on legislation soon,” he said.
The Canadian Credit Union Association says that more than 5.7 million Canadians bank at a credit union, with many of those people looking to shirk the profit motive of the big, financial institutions. For that reason, Ras said that these new regulations will not change the character of Meridian or other credit unions, or turn them into just another bank.
“The one thing we’ve been adamant about is that we want to maintain the cooperative ownership structure that focuses on the member,” Ras explained. “Our members are our owners, and one of the principal differences that we pointed out to the government is that you can’t put legislation on us that is set up for a shareholder-based ownership structure because our members are our owners.”
It was a busy day for economic announcements from the Provincial government on Friday. Premier Doug Ford was at Sheridan College in Brampton announced nearly $560,000 for General Machinist and Industrial Mechanic Millwright pre-apprenticeship programs, while Minister of Labour Monte McNaughton was at Conestoga College in Kitchener announcing $9.2 million for in-class training and apprenticeships for 21 different trades in the 2020/21 school year.