Thank you for the invitation to be here today.
Our association represents almost 260 credit unions and caisses populaires outside of Quebec. We serve over 5.6 million Canadians, contributing $6.5 billion to the country's GDP.
I think most of you are familiar with our sector. I do want to underline that credit unions are the only brick-and-mortar financial institutions in about 370 communities across Canada, providing an important alternative to big banks.
The regulatory burden remains an acute concern for credit unions. We have recent studies that show that small credit unions in Canada devote about five times more resources to regulatory compliance compared to their larger cousins.
In general, I'd like to make a statement about the fintech changes in Bill C-74. Our sector supports them, although we are reserving some judgment around the competitive impact.
However, I want to focus today on the proposed changes regarding banking terminology.
Our members were pleased with the commitment in budget 2018 to changes that allow credit unions to use generic banking terms, subject to disclosure. The commitment is, obviously, now reflected in the legislation.
The proposal would allow our members to continue to speak to Canadians about financial services in the language of financial services. We're grateful to members around this table and to the all-party parliamentary credit union caucus, amongst others, for the support in the campaign that we had earlier this year and last.
The caveat “subject to disclosure” is, we think, a signal that federal policy-makers have concerns about consumers' awareness of the regulatory structures surrounding all financial institutions, particularly due to the emergence and growth of unregulated financial institutions and the fintech sector in Canada.
We understand that federal policy-makers are looking for standardize practices about what information is shared with members and potential members regarding who regulates credit unions and who provides deposit insurance.
We are regulated, deposit-taking financial institutions. Our members remain concerned about the impact of extensive regulation on their ability to compete when such regulation doesn't contribute to the safety and soundness of the sector.
Provincial credit unions are incorporated, regulated, and insured at the provincial level. Regulatory authorities at the provincial level set credential standards and conduct reviews that are appropriate to co-operatively owned, deposit-taking institutions that have little exposure to international or foreign exchange markets.
We outperform other institutions in making high-quality loans. In fact, credit union losses have averaged less than half a per cent of total loans over the last two decades compared to our competitors. Provincial deposit insurance provides credit union members with protections equal to or greater than those available to bank depositors. Credit unions take extra steps to ensure that every dollar is protected.
The credit union system is committed to providing leadership in the area of consumer protection, and to ensuring that we continue to provide outstanding service. Our system puts the interests of its members first and foremost.
To this end, we are developing a national market code, or consumer code, that will support, advocate, and help to advance best practices. Our voluntary market code will ensure that Canadians understand the credit union difference, and they can be reassured of our commitment to transparency, integrity, and customer service. Among its many benefits, a voluntary code is the most effective way to ensure that consumers understand the regulatory and deposit-insurance framework of their credit union. In other words, it is our goal to meet the disclosure requirements through voluntary means.
There's ample evidence that voluntary codes are expedient, effective tools for ensuring consistent outcomes while also reducing jurisdictional challenges and cost. The Office of Consumer Affairs at Innovation, Science and Economic Development Canada has suggested that voluntary codes offer a number of benefits to consumers, as well as to government and business.
In closing, I would like to underline that I'm here to represent credit unions across the country that are asking for flexible use of generic banking terminology and for a reasonable approach to disclosure requirements.
Thank you.