CREDIT UNIONS MUST EMBRACE CENTRAL BANK

Increasingly, they have entered the world of major investments, not unlike banks and holding companies of insurance firms, and light years removed from the original thrust of assisting members through the provision of low cost loans or making goods accessible through their cooperative societies below market price.

Although credit unions cannot, by the regulations governing them, be public companies, nonetheless there are those who have become shareholders in some of the more established public companies listed on the Trinidad and Tobago Stock Exchange and cross listed on regional stock exchanges. This means that their investments may be in companies outside TT.

Meanwhile, although credit unions may not have the same freedom of operating as that of banks or say insurance companies, nevertheless the playing field must be made level. One way to do so would be placing them under the authority and supervision of the Central Bank.

A member of a credit union, whether his shares are large or small, is in today’s context an investor, and his investment, or indeed the credit union’s entire investment portfolio should be subject to its being monitored by the Central Bank.

We are not dealing here with pennies or a few dollars. In many cases millions of dollars of credit union members are involved and there is the need to minimise the risk to the members, according to Central Bank Governor Ewart Williams at a forum last week.

Admittedly, not all of the credit unions may be into major or even medium investments but as we stated earlier all are financial service providers and should come under the control of the Central Bank.

So the emphasis would be on added protection of their shares, argued Williams. We wish to make clear that we are not stating that under the present system members’ shares are not protected, but that it is necessary to widen their protection coverage through placing them with other financial service providers under one regulatory body — the Central Bank.

Such a change may mean that instead of each credit union member having only a single vote at the annual general meeting regardless of the volume and value of his shares, there may now be minority and majority shareholders. This, however, will in no way make the operations of the credit unions any less beneficial to members.

It merely recognises that credit unions are increasingly a part of the mainstream financial services industry.