The Association of Vermont Credit Unions appealed Thursday to the state’s credit union and banking regulator to recall a cease-and-desist order to be placed on a Montpelier credit union, the $600 million Vermont State Employees, for using “bank” or “banking” in its ads.
In a statement, Joseph Bergeron, the trade group’s president/CEO, asked the Department of Financial Regulation to re-evaluate its June 18 directive against VSECU, arguing the term “’banking’ and its variations is common nomenclature used by most everyone to describe the generic handling of their financial matters with some type of provider of financial services.”
- UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' Word Dispute
“Consumers use the term to describe what they’re doing, not particular to any type of service provider,” Bergeron said, stressing that consumers commonly say, “I do my banking at’ ABC Bank or XYZ Credit Union or whatever other provider they so choose.”
The media itself, he said, “accepts and fosters such use in hundreds of articles we all see throughout the year on advising consumers on ‘where to do their banking,’ or where to "get the best deal on banking,’ etc.”
The intent of Vermont law, he said, is to prevent people or entities that are clearly not regulated financial institutions from deceiving consumers into believing they are something they are not by masquerading as some form of bank.
But Thomas Candon, deputy commissioner of banking and the lead credit union regulator, maintains VSECU has gone beyond that threshold by advertising as a bank in its use of “banking” in its ads.
In response to a VSECU request, Candon has scheduled a hearing on the cease and desist in late August with an exact date to be announced soon.
Bergeron said he was unsure how far the DFR or VCSECU might take the case following a ruling on the appeal or whether the issue would go beyond Vermont’s borders.
“Right now it is one credit union facing a cease and desist from one state regulator,” said Bergeron.
In his statement, Bergeron said VSECU, “and every other Vermont credit union to our knowledge, is proud to be a cooperative credit union and has never tried to convince consumers it is something other than a cooperative credit union. Everyone understands that use of the word ‘banking’ is in reference to a consumer's action, not the form of the entity.”