As a system, we have an opportunity to begin shaping a future state for the 2nd Tier that is designed to meet the needs of our organizations, and ultimately our members. This begins with a coordinated, critical, thoughtful, and collective system discussion being launched by Central 1.
In Canada, credit unions trace their roots to the early 1900s with the first caisse populaire, formed by Alphonse Desjardins, in Levis, Quebec.
Today, there are 623 credit unions and caisses populaires in Canada, with almost 3,000 branches. They hold combined assets of $350 billion and serve more than 10.1 million members.
Throughout its history, the Canadian credit union system has maintained a record of sound, prudent financial management, solid growth and unparalleled service to members. To this day, credit unions and caisses populaires continue to play an important role in fostering community development.
Credit unions are financial cooperatives. Their products, services and operations — and even their physical appearance — may resemble those of banks, but there are some major differences. The biggest ones are that they're locally owned and invest their profits in the communities where they operate; where their members live and work.
Retail customers (we call them members) own credit unions, which are democratically governed on the cooperative principle of “one member, one vote,” regardless of the amount that a member has on deposit or invested in the shares of a credit union. Subject to rules adopted by members, every member has the opportunity to stand for election to the Board of Directors and vote for candidates who are looking to become volunteer directors tasked with establishing the long-term vision of their credit union — they’re also the bosses of CEOs.
In a nutshell, credit unions are accountable to their members.
Unlike banks, credit unions are autonomous. Each one has its own brand identity, management and Board of Directors, but they're united through provincial centrals. These provide financial, technology and trade services to their member credit unions.
We, as an example, are the central for credit unions in B.C. and our members in Ontario. They own us — just like individuals in Alberta, Saskatchewan, Manitoba, Quebec and the Atlantic provinces own the credit unions where they bank.
Known as a “credit union system,” this is a network of independent credit unions. They're chains of cooperatives — and there’s power, support and stability in numbers.
The Canadian Credit Union Association (CCUA) is the national trade association for the Canadian credit union system. It's also a cooperative, owned and governed by Canada's credit unions and caisses populaires (outside Quebec).
In British Columbia:
In B.C., the Credit Union Deposit Insurance Corporation (CUDIC), a statutory corporation, fully guarantees all money on deposit and money invested in non-equity shares, including foreign currencies and accrued interest, accepted by a credit union in British Columbia. CUDIC is administered by the Financial Institutions Commission, an agency of the provincial government of B.C.
In Ontario, the Deposit Insurance Corporation of Ontario (DICO), a provincial agency, covers eligible deposits in Canadian dollars up to $100,000 in each of the prescribed categories. Additionally, DICO provides unlimited insurance for each registered savings plan or contract, including registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), registered education savings plans (RESPs), registered disability savings plans (RDSPs) and Tax-Free Savings Accounts (TFSAs).
In both provinces, deposit insurance applies automatically.
Credit unions in B.C. and Ontario are incorporated under provincial legislation.
In B.C., they're authorized to conduct deposit business or both deposit and trust business under the Financial Institutions Act of British Columbia. The Act confers powers on credit unions to lend, borrow and invest. It also specifies the amount and types of reserves they must maintain.
Provisions relating to credit union membership and shares are set out in the Credit Union Incorporation Act of British Columbia.
In Ontario, credit unions operate under the provincial Credit Unions and Caisses Populaires Act 1994, which includes provisions related to credit union membership and shares.
The Financial Institutions Act requires that each credit union have an audit committee and be audited by independent auditors. Credit unions are also subject to inspection by the Superintendent of Financial Institutions, an official (or an appointee) of the Financial Institutions Commission. In B.C., financial institutions, including credit unions, are regulated by the Financial Institutions Commission. The Commission is responsible to the provincial Minister of Finance.
In Ontario, credit unions are regulated through a comprehensive framework that involves the provincial Ministry of Finance, the Financial Services Commission of Ontario (FSCO) and the DICO. FSCO regulates registration of credit unions and caisses populaires under the Credit Unions and Caisses Populaires Act 1994. FSCO is responsible for ensuring that credit unions operate in accordance with the requirements of that Act.
DICO is responsible for overseeing compliance with solvency rules and for insuring eligible deposits. As part of this responsibility, DICO has the authority to issue bylaws to ensure that insured institutions operate in accordance with sound business and financial practices.
Stabilization Central Credit Union of British Columbia is a self-regulatory organization (SRO) that monitors and assists credit unions with governance, risk management, operational and financial challenges. It strengthens the provincial system through supervision of credit unions that are assigned to it by the Financial Institutions Commission. It also provides services including financial analysis, Enterprise Risk Management (ERM) and IT Governance.
Every local credit union in B.C. must be a member of Stabilization Central as a condition of holding a business authorization. These same credit unions fund the stabilization authority, which is directed by a Board elected by, or appointed from, these members.