The Department of Finance (DoF) wants to make it easier for credit unions (CUs) to switch from provincial to federal regulation. It issued this release today.
The DoF’s aim is to address the concerns of CUs, which are currently provincially supervised. Those concerns revolve around things like federal deposit insurance and restrictions on insurance sales.
From a mortgage standpoint, however, a move to federal rules would be a mixed bag.
For one thing, it would put CUs that elect federal regulation under the oversight of banking regulator Office of the Superintendent of Financial Institutions (OSFI). That means much of the lending flexibility of those credit unions (e.g., lower qualification rates, higher loan-to-values on HELOCs, etc.) would be eliminated.
On the other hand, bigger and better capitalized national credit unions could see improvements in funding ability, brand recognition and consumer uptake, providing increased mortgage competition to the Big 6.
Flaherty says, “A number of credit unions have expressed interest in going federal. So far, however, few CUs have publicly proclaimed that interest. BC’s Coast Capital and Ontario’s Meridian Credit Union are two that have.”
Almost 1/3 of Canadians are credit union or caisse populaire members, according to the press release. CUs are also the only brick and mortar financial institution in over 340 communities across the country, says the Credit Union Central of Canada.
Rob McLister, CMT