A CREDIT UNION FUSS?

The nervousness shown by the President of the Co-operative Credit Union League (CCUL), Gary Cross, with respect to Government’s plan to move the country’s credit unions from under the umbrella of the Commissioner of Co-operative Development and place them under the supervision of the Central Bank is perhaps understandable. Unwittingly, however, Cross by pointing out that the credit union movement is a “provider of financial services” has advanced the rationale behind Government’s move to bring the credit union movement under the jurisdiction of the Central Bank and that is, not unlike banks, insurance companies, mutual funds and companies, generally credit unions are part of the financial services industry.

What Cross   should be doing at this stage is arguing the case for a special Credit Union Act in much the same way that there is an Insurance Act, which set the ground rules for the way these institutions operate. Cross and the rest of the CCUL Executive should appreciate that it makes greater sense, and indeed is inevitable, that all of the country’s financial service providers should come under one supervisory body — the Central Bank of Trinidad and Tobago. For Government to continue to do otherwise would be to treat credit unions as separate and distinct from the financial services industry, of which they are a part. The movement’s nervousness  is understandable. It was the same reluctance shown by the insurance sector four years ago.

But in the same way that the lines between insurance companies and banks first became somewhat blurred in the 1980s, the lines between credit unions and banks must be clearly demarcated. Recently, one of the nation’s credit unions — the PTSC Credit Union formed in 1966 — was interested in constructing, along with two other credit unions, a multi-million dollar, multi-storey business complex in downtown Port- of-Spain. A Credit Union Act is certain to introduce fundamental changes in the way credit unions do business. For example, a shareholder’s voting power  in a publicly traded company depends on the value of the shares he holds in the company, while in credit unions it is a case of one  individual one vote. Additionally, there should be provisions which would allow for the interest rates they charge to be determined by the market place.  

In addition, with the coming into being, however gradual, of the Caribbean Single Market and Economy (CSME), individuals in other CSME countries should be afforded the facility of being able to acquire shares in Trinidad and Tobago credit unions. Placing the movement under the jurisdiction of the Central Bank will position it more securely to be regarded with the respect it deserves as one of the nation’s longest existing financial institutions. In much the same way as banks and insurance companies have done, there will be a merger of credit unions, or an acquiring of the interests of the smaller finance houses to make way for more compact and stronger credit unions.