The Ontario Minister of Finance recently recommended a number of significant changes to the legislation governing credit unions, which will impact the way this area of the financial sector operates. A recent report to Ontario’s Minister of Finance recognizes the increasing presence and role of credit unions in Ontario, especially in remote northern and ethnic communities where other financial service providers may not be present. It further recognizes that while the number of credit unions across the province has decreased, their average size has increased as a result of merger activity.
The key recommendations include an increased capital holding requirement, a removal of certain rules for small credit unions, and amendments to Ontario’s credit union consumer protection framework. The report specifically refers to the lack of ombudsman or dispute resolution mechanism applying to credit unions and recommends that standards be codified in legislation and regulations to ensure consumer protection standards apply to credit unions.
Finally, the report suggests working with credit unions to explore what credit unions could do to serve as an alternative to high cost payday loan providers and develop education initiatives to improve consumers’ financial literacy. This is no doubt a response to recently-settled class action litigation relating to payday loans. BLG's Client Advisory on the report can be read here.