The Ontario government is seeking public input on new draft regulations that would modernize the credit union sector, the finance ministry announced on Friday.

The proposed regulations have five main objectives: strengthening governance in the sector; enhancing the ability of credit unions to manage risk; streamlining regulatory requirements while promoting effective regulatory oversight; creating flexibility to pursue growth and innovation; and ensuring updated consumer protection standards are in place.

“The proposals described in this document are intended to enable credit unions and caisses populaires to serve their members better and support the sector’s competitiveness in delivering financial services,” said Wayne Arthurs, parliamentary assistant to the Minister of Finance.

The Ministry of Finance launched public consultations on Friday to get input from industry stakeholders, including individuals, credit unions, associations and organizations. The consultations will run until March 31.

Some of the specific changes in the draft include establishing new criteria for determining whether a credit union is maintaining adequate capital, new disclosure requirements related to the remuneration paid to its officers and employees, and new disclosure requirements for credit union financial statements.

The draft also calls for new restrictions on real estate and commodity investments, and proposes repealing the requirement for a credit union to obtain a lending licence; instead establishing lending limits for classes of loans within the regulation.

Furthermore, the regulation would require that credit unions designate a complaints officer who would report to the board at least annually on complaints from members and depositors, and how they were resolved.

The draft also sets out the way in which the cost of borrowing is to be calculated by a credit union, and proposes mandatory disclosure requirements to borrowers on these costs.

“Our government is serious about financial services regulation in Ontario,” said Finance Minister Dwight Duncan. “The aim of these changes is to balance the needs of credit unions to remain competitive with the need for regulatory prudence, an important goal in light of the current global financial turmoil.”

IE