Feds Crack Down on Use of Word “banking” by Non-Banks
OSFI just issued an advisory threatening to bring criminal sanctions against non-banks that use the words “bank”, “banker”, or “banking”. Their cover note gives specific dates by which use must stop. This derives from section 983 of the Bank Act, which says in part that a non-bank can’t use: “… the word “bank”, “banker” or “banking” to indicate or describe a business in Canada or any part of a business in Canada…”. Examples given of improper use include: “Come do your banking with us”, “Automated Banking Machine”, “Bank Accounts”, “Better Banking”, and “Mobile Banking”. It also says they can’t advertise under a “banks” heading of a directory.
The Canadian Credit Union Association was quick to respond with a press release saying: “Ottawa is telling credit unions to stop using the words Canadians use to describe the work we do … This rule will prevent credit unions from advertising their ‘business banking’ services or even having an ‘on-line banking’ button on a website.” And that: “OSFI has taken a position that is inconsistent with its past practices and with common sense.”
What do readers think?
Is this crackdown needed to stop confusion in the marketplace and to preserve the rights of banks?
Have terms like “banking” become a generic and acceptable way for credit unions and other non banks to describe their services?
Goodness gratious, I have _always_ used “banking” to describe anything I did with a credit union.
Credit Unions and Caisses Populaires are licenced bodies, they should be allowed to keep using the word “banking” and the like to describe their business.
It’s unlicenced businesses like bitcoin (and “bitcoin ATMs”) that are what I’d deny the use of the word to.
I can easily see this devolving into a federalism tiff. Without question the federal Parliament has the right to regulate banking; it’s less clear that they have the right to regulate provincially regulated credit unions in this way.
No Grameen bank (Nobel prize cowinner) advertising which solicits donations for their microloan services that in any way use the word bank or words sounding like it?
In the non-financial realm it seems so long as not a prescribed business sperm banks and databank services will be permitted to use those names or descriptions (the advisory says “food bank” non-prescribed okay, but “gene bank” for a prescribed entity doing genetic work not okay).
On principle, I disagree with most limitations on non-deceptive speech. If a credit union wants to say they offer banking services or banking machines, they should be able to.
What a ridiculous position when it’s a commonly accepted term of speech for what people do at their credit union. I’m thinking the credit unions will be gearing up for a freedom of speech dispute with the Feds.
I can guess that the Bank of Canada is concerned about the development of financial technology enterprises that are owned and run by very non-traditional businesses, like telcos, phone manufacturers, digital conglomerates like Google and Amazon, plus any number of start-ups. These operations may provide value to their customers but they should not use terms that make it appear that they are regulated by, or that their financial stability is guaranteed by, the Canadian supervisors.
Canada’s banking system has a good reputation for prudence and reliability. Businesses outside the system should not be able to trade on that reputation.
That said, hitting reputable and well-established financial institutions, like credit unions and caisses populaires, does not make sense in this context. Nor does any limit on non-financial uses of the term – food bank and gene bank have been mentioned – or in reference to foreign banks not actually soliciting bank-like business in Canada.
It sounds as if the Bank of Canada should go back to the drawing board.