MISSISSAUGA, Ontario -It looks as if the status quo is winning for the time being in Canada. On April 1, 80% of the delegates at a meeting of the Credit Union Central of Ontario endorsed a resolution to move ahead with the National Initiative, a multi-part national restructuring initiative aimed at improving service to Canadian credit union members. CU Central of Ontario's delegates supported the idea of the business case portion of the initiative. "Business case" is the Canadian term for the right to operate non-credit union businesses, and is related to CUSOs or service organizations in the U.S. The National Initiative is related to ongoing discussion about making changes in laws governing credit unions. Currently, the credit union system is a three-tier system. Local credit unions are the first tier, provincial credit union centrals are the second tier, and the third tier is a national credit union entity, CU Central of Canada, owned by the provincial centrals. There is no national, only provincial, regulation of local credit unions. Proponents of structural changes have taken two different stances. Credit unions that want to expand their operations and powers want to move to two tiers and an enhanced national presence by rolling all their assets into a new National Community Cooperative Bank. Most of those credit unions are located in British Columbia. When the large Van City CU pulled out of the coalition favoring this alternative, the Bank proposal went on hold. Opponents to the Bank proposal held that under national legislation, credit unions would lose their autonomy, or ability to operate under local, provincial control. Also, they said, a national approach runs counter to the idea that credit unions need to remain small. They favor a National Service Entity in a model similar to CUNA and Affiliates, a trade association-led effort to offer services on a fee for service or assessment basis. The NSE proposal would also have created two tiers, but would eliminate the provincial centrals, and leave only individual credit unions and the national Credit Union Central of Canada. The National Initiative appears to be a sort of middle road between those two approaches and is an extension of the NSE proposal. It envisions using Canadian credit union centrals more cooperatively to overcome the obstacle presented by the fact that no local credit union can operate outside a provincial boundary. No tiers would be eliminated, but provincial centrals will be allowed to set up national cooperative business ventures. John Guss, president and CEO of CU Central of Ontario, a C$1.3 billion financial and trade services organization that represents almost 300 independent, community-based credit unions in the province, said he was pleased with the vote. "The National Initiative is an important step in raising the profile of the credit union system across Canada. There is tremendous opportunity for the system to grow," he said, and urged credit unions in other provinces to support it. And, in fact, other provinces will be looking at the Initiative in the coming weeks, particularly in developing the business case. Those decisions will be passed on to CU Central of Canada, whose board will decide in June how the national system will proceed. -
mcintyre@viclink.com
