Thank you, Mr. Chair.
Thank you, as well, members of the committee, for the invitation to speak with you today.
My name is Michael Hatch, and I'm a vice-president with the Canadian Credit Union Association. I worked very closely with the Department of Finance in the days in February that are now the subject of this committee's work.
The CCUA represents 211 credit unions and caisses populaires outside of the province of Quebec. Credit unions contribute nearly $7 billion to Canada’s economy by providing deposit, loan and wealth management services to 5.9 million Canadians. Collectively, credit unions employ nearly 30,000 people and manage $290 billion in system assets.
Credit unions are co-operatives, as you know. In other words, the people who bank with us are the same people who own credit unions. Being accountable to our member-owners, as opposed to shareholders, results in customer service that is second to none. We consistently rank at the very top of surveys of customer satisfaction for financial services.
For members of this committee representing rural areas, it's also important to note that for almost 400 communities across Canada, credit unions are the only providers of financial services to households and businesses.
As I mentioned, CCUA worked closely with Finance officials and the RCMP earlier this year as Emergencies Act measures were rolled out. We’d like to thank once again on the record the minister and her team for keeping in regular contact with us in the heat of the crisis. We're particularly grateful to senior Finance Canada officials who, on short notice, provided an in-depth briefing to our members on the financial components of the emergency orders, attended by over 600 credit union representatives from across Canada.
We do have some constructive feedback to provide on some other elements of the process if I may, Mr. Chair.
In the early days of the crisis there was the impression, not uncommon in our dealings with the federal government, that the large six banks—with respect to my colleague from the CBA, of course—were consulted or informed days before credit unions and other financial institutions. Credit unions represent almost half the financial sector in some provinces, millions of Canadian consumers and tens of thousands of small businesses. We need to be at the table in discussions with Ottawa at the same level as the federally regulated banks in all matters that directly impact our operations and our members, particularly in times of crisis such as this.
When the measures were first announced, it was very unclear to whom the financial sanctions applied. Eventually, it became clear that they were aimed at a very small list of individuals and entities. However, in the early days, there was a degree of panic among some Canadians that their accounts may be frozen due to things like small donations to the convoy. In those important days, the government was less than clear about the intended targets of financial measures under the emergency orders.
Many of our members expressed this concern, and many Canadians made significant cash withdrawals from credit unions as a result, sometimes in the hundreds of thousands and even millions of dollars. While these withdrawals did not cause liquidity issues in our sector, many credit union staff of course had to manage very unhappy members and customers. Better and much clearer communications from the government from day one could have mitigated this.
One credit union leader wrote in the heat of the crisis, “We had a tremendous amount of members very seriously concerned regarding the government’s ability to seize”—and freeze—“accounts; it brought forward a large sense of mistrust with the government that they could just seize individuals’ accounts.”
The government also granted a significant level of discretion to financial institutions regarding which accounts to freeze. This further contributed to confusion, and to possibly an uneven application of the financial components of the measures across the country. Many would have appreciated further guidance from the government on precisely which accounts should be frozen.
In the end, across our sector a very small number of credit union accounts were frozen, and for a short period of time. Our members froze a total of ten accounts with a total value of less than half a million dollars, an insignificant number given the stress that the measures put on the sector.
Our main message to the government and this committee is that credit unions need to be at the same table at the same time as the large banks whenever the federal government is enacting policy through the financial system. Our financial sector consists of much more than six institutions, and there continues to be frustration among credit unions that this requires such frequent repetition.
We hope this feedback is helpful to the government and the committee, and I'm happy to take your questions.
Thank you, Mr. Chair.
