The provincial regulator for financial services is looking into who sits on credit union boards and how those directors are elected.
With B.C. credit unions quickly becoming more diverse while handling billions of dollars in assets, the Financial Institutions Commission plans to strike a task force that could determine if changes are needed to ensure credit union members are being well-represented.
“Pretty well every financial regulator in the world is looking at this issue,” said Carolyn Rogers, superintendent of FICOM. “In general, the financial crisis that everyone has lived through has increased the scrutiny on financial institutions and the role they play in the economy, and so regulators are looking at a variety of ways that ensure they are sound and healthy and remain that way.”
Rogers said the review wasn’t prompted by any specific incident or complaint.
Unlike chartered banks that appoint directors, the philosophy of credit unions has always been to have its members select the board of directors.
Rod Dewar, president and CEO of Island Savings, says he doesn’t see that changing as a result of the review.
“Members electing their own board is a core foundation of the credit union movement and I don’t expect that to change at all,” said Dewar. “There may be a request to adopt a more standardized approach to board qualifications, they may touch on term limits, they may make mandatory certain skill sets for certain committees, but I don’t see them changing the voting system.”
Island Savings’s corporate profile indicates it has 57,000 owner-members with $1.7 billion in assets under administration, which is governed by a nine-member board of directors.
Coastal Community Credit Union has more than 80,000 members with assets of $1.6 billion and 12 board members.
Joe Cristiano, spokesman for Coastal Community, said his company welcomes the review.
“It’s too early to say how it will affect us, but as one of the largest credit unions in B.C., whatever recommendations are made will affect us. Generally speaking, we agree with the regulator being proactive – governance is something that is very important and something we’ve always taken seriously.”
Rogers said one of the challenges FICOM must consider is applying regulations that can be achieved by smaller credit unions as well as large ones.
Dewar said Island Savings already took steps to address the company’s growth and member need through its board.
“Island Savings reviews its board qualifications on an annual basis and we also use a confidence matrix,” said Dewar. “So we’re looking for a mix of skills that match the needs of the organization. In our case, we have lawyers and accountants and small business people and we think that’s a good balance for the kinds of business we’re in, while looking after our members’ needs.”
Rogers said invitations to join the task force will be sent out in the coming weeks.