MNP Responds to Proposed Restrictions on ‘Bank’ Terminology

MNP recently submitted a response to the federal government’s proposed ban on credit unions using the words “bank” and “banking.” The proposed ban was sparked by the Office of the Superintendent of Financial Institution over concerns for consumer protection in light of the growing popularity of new, unregulated financial services, particularly online services.

We support the department’s proposal to review the Bank Act restrictions around the use of the terms ‘bank,’ ‘banker’ and ‘banking’ in these cases. As a firm invested in the industry, we understand the intent of this section of the act is to provide clarity to Canadian consumers, so they can distinguish between regulated and non-regulated financial service providers. 

However, credit unions are regulated by the provinces they operate in. We feel that allowing credit unions as provincially regulated financial institutions the ability to continue to use ‘bank and banking’ terminology to describe their financial services is an investment in Canada, in research and development, and innovation. 

The key points raised in our submission were:

1. It is in the best interests of all Canadians to support a strong, prudentially-sound and well-regulated credit union system. Credit unions are prudentially sound financial institutions. 

2. It is critical that consumers be able to easily differentiate between doing business with regulated and unregulated financial services providers. The proposed changes make it more difficult to do so. 

3. The impact on these proposed changes on professional services firms and other suppliers to non-bank financial institutions is not clear.
Rather than issue a blanket ban of the use of “bank” and “banking,” MNP has recommended the Department of Finance allow non-bank regulated financial institutions to follow common-sense approach to using the terms as a descriptive verb. This approach could include reasonable limits to prevent non-bank financial institutions from purposefully misrepresenting themselves as federally regulated banks. 

MNP further recommend the Department of Finance provide additional clarity on how professional services providers and other suppliers would need to comply with said regulations. 

As a national accounting, tax and consulting firm with more than 4,100 team members across Canada, MNP’s involvement with the credit union industry spans decades. Our dedication and commitment to this vital financial service sector has resulted in MNP being one of the largest providers of professional services to credit unions. 

Read MNP’s full submission to the federal government here.

Contact Annette Bester, National Leader Credit Unions, at 306.664.8327 or [email protected]