With a membership accounting for two out of three Barbadians, the nation’s credit unions are demanding a seat on the Social Partnership.
This was one of the requests that the Barbados Cooperative and Credit Union League, with 55 registered organizations accounting for over 200,000 members, made over the weekend through its president Anderson Henry as the membership gathered at the Hilton hotel for a 60th anniversary dinner and award ceremony.
“Given the large constituency that we represent we are of the firm view that the movement should be represented in a re-configured Social Partnership in its own right,” Henry said while delivering welcome remarks to the gala event Saturday.
“We should no longer have to depend on the goodwill of organizations to be seated.”
The Social Partnership, made up of Government, trade unions and the private sector, was established since the 1990s to meet monthly for discussions and decisions on national issues.
Along with the demand for membership of this currently tripartite group that it now wants to make a foursome, Henry said his membership is asking for modernization of the more than half-a-century old legislation governing credit unions so these financial houses could be legally free to engage in other businesses besides lending to members.
“We believe that the credit union movement has overgrown the omnibus cooperative legislation that was passed in the 1950s.”
“It is about time for credit unions-specific legislation to be placed on the statute books,” he said, adding, this “will provide the legislative framework for a modern and facilitative legislative environment”.
Additionally he said, “credit unions access to an automated clearing house operation by the Central Bank should also be facilitated”.
Access to that clearing system would enable credit unions to electronically transfer funds and payments among organizations and process third party payments, such as cheques faster.
Addressing an audience that included Minister of Small Business Dwight Sutherland, Henry repeated an eight-year call for credit unions to have access to deposit insurance which would provide security for money that members place in these organizations in the event that those financial houses encounter operational difficulties.
“We at the league have been lobbying hard for this since 2010. It is about time the 210,000 plus credit union members receive the same level of protection as that enjoyed by customers of commercial banks, financial companies etcetera.
“We are calling on the new administration to make this a priority,” Henry said.
Though he did not respond to the other demands in his feature address following Henry’s presentation, Sutherland said that he agreed on the need for deposit insurance and promised, “we must implement, and I will take back the word [to Cabinet]”.
In spite of the fact that credit unions have in the past received promises and assurances regarding their demand for deposit insurance, Sutherland’s response bears hope of early action as he went on to speak of imminent changes in the laws governing the sector based on a current evaluation of systems.
“The Financial Services Commission [that regulates credit unions] under the chairmanship of Professor [Avinash] Persaud is conducting a comprehensive review of all the Financial Services Commission’s enabling legislation to ensure that the thrust towards a risk-based supervisory framework for the non-bank financial centre is appropriately supported by law.”
He said that “credit unions will be required to . . . ensure that appropriate risk-management systems, scaled to size and complexity are implemented and adhered to”.
That risk management covers concerns of access to deposit insurance for which the credit unions have been requesting.
The Minister outlined possible circumstances that point to the need for deposit insurance.
“If an excessive amount of depositors were to demand their savings today, is there a framework that will govern the sourcing of additional liquidity? You have to ask yourselves that question.
“Or if entities were required to unwind from certain exposures, is there a policy framework that governs this operation?” he queried.