Meeting and adhering to increasingly complex and costly compliance standards may force some credit unions to either merge or transfer their assets and liabilities to other credit unions.
This is a probability which President of the Barbados Co-operative and Credit Union League (BCCUL) Mr Hally Haynes outlined to delegates and other representatives of the credit union movement during the BCCUL’s recent annual general meeting (AGM) at the Lloyd Erskine Sandiford Centre.
Haynes, who heralded the work and performance of the 30 credit unions across the island who are all affiliates of the BCCUL, the credit union movement’s representative body, said the League was helping to guide the movement through the emerging regulatory environment and other challenges.
“We have a new regulatory regime that seeks to enhance the robustness of the financial sector, which is needed. However, this regime will challenge the viability and sustainability of some of our credit unions,” Haynes told delegates last Saturday at the 2021 AGM which was rescheduled from last year due to national COVID-19 restrictions.
“As you may be aware, compliance is becoming more costly and complicated and, as a consequence, some small and medium-sized credit unions will be under pressure to meet the requirements.”
Among the compliance standards which credit unions are obligated to meet are anti-money laundering and counter financing of terrorism (AML/CFT); common reporting standard (CRS) required by the Organisation for Economic Cooperation for Development (OECD); compliance with the recently enacted Credit Reporting legislation; and expected minimum standards for entry into a planned state-backed deposit insurance scheme for credit union members.
In his address to the officials of several credit unions, Haynes said the League was also moving to address the pressing issue of electronic access, through the deployment of a national level electronic payment platform.
That platform, he explained, would support the Government’s vision for a digital transformation and a cashless economy. It would manage and reconcile peer-to-peer payments within the national payment ecosystem.
The payment platform would also reduce the time and costs associated with processing electronic, cheque, and card-based payments, thus removing the need for “expensive external third-party transaction acquiring services”.
Such a locally-owned entity, Haynes explained, would reduce and recapture payment processing fees and use them for the benefit of Barbadians.
“This will allow us to offer members more convenient payment options in a world that is becoming increasingly digital,” the BCCUL president said.
“We must be nimble now more than ever in our decision making at the level of individual credit unions and also at the League. As you are aware, it took us ten years to develop a shared services mechanism for the movement. We must act now or we will be left behind and lose market share to our competitors.”
There are now over 225,000 credit union members in Barbados and cumulatively, the movement has assets of $2.87 billion under management.
In its 2021 statement of comprehensive income for the year ended July 31, 2021, the BCCUL recorded an operating profit of $38,477 which was a significant improvement on the $23,661 reported for the corresponding period in 2020.
During last month’s AGM, long-service awards were presented to representatives of the United Enterprise Credit Union, UWI (Cave Hill) Credit Union, Family Credit Union, One Heritage Credit Union and BET Credit Union.
(BT/PR)
This article was originally posted in the Nation Newspaper.