An Oct. 5 settlement arising out of the showdown between the $600 million Vermont State Employees Credit Union and its state regulator over use of the word “bank” in advertising leans in the credit union’s favor.
According to a joint release from the two parties, the Montpelier-based credit union cannot describe itself as a bank, but may use the word “banking” and similar words when advertising its services, as long as it discloses that it is a credit union.
That means VSECU’s tag line, “Redefining Banking,” can remain.
“This is not a matter of who won or lost a dispute,” said VSECU CEO Steve Post, “but an example of the state’s regulators and industry working together to solve a problem.”
A bulletin posted on the state’s Department of Financial Regulation website said effective Nov. 15, state-chartered credit unions may not use the work bank to describe itself in marketing or advertising materials. The bulletin specifically said that includes a credit union referring to itself as a “banking cooperative,” as VSECU did.
DFR Commissioner Steve Kimbell said VSECU’s request for a hearing on the regulator’s enforcement of the statute “teed up a matter that’s been in discussion for a number of years.”
The legal clarification doesn’t give the nonprofits any new rights to use the word banking in advertising, said DFR General Counsel Clifford Peterson. The statute is what it is, Peterson said.
Rather, he said, the legal clarification answers the question of whether a credit union’s use of the so-called b-word is misleading or confusing to consumers.
Although state-chartered credit unions can use the term banking when referring to the services it provides, it must disclose that it is a credit union.