Credit Unions To Fight New Law

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Banking

Friday, 07 October 2011 02:30

By Everton Barnes

Antigua's credit union movement is up in arms over the new Cooperative Societies Act, which it is feared may stymie the growth of credit unions, which play a critical role in providing financial assistance to many in the society.

The law was passed by Parliament last June, and took effect in January. But according to the Antigua Credit Union League, members are only now facing some of the new restrictions.

The League is the umbrella body grouping the nation's credit unions the St John’s Cooperatives Credit Union (SJCCU), the Community First Cooperatives Credit Union, the Police Credit Union, APUA Credit Union, the Christian Cooperatives Credit Union, and the Seventh Day Adventist Credit Union.

Its president, Carol Browne, said the credit unions recently met to draft a common position and to raise objection to sections of the law, namely section 121 (5), which places very strict limits on the amount that a board member or staff member can borrow; and section 121 (6) that limits the amount any single member can borrow - which cannot exceed 10 percent of the share capital of the individual credit union.

“We feel that we were not given a role to play in the drafting of the legislation, and while we had submitted a draft bill ourselves, we feel closed out of the final process to determine what goes into the law and what does not,” she explained.

The Credit Union League has compiled its position on the legislation, which it hopes to dispatch to the attorney general’s chambers on Friday.

This was one of the points raised when the country’s second largest credit union, the SJCCU, convened a special meeting on Thursday.

SJCCU President Yves Ephraim told the packed house that the meeting was being held to discuss two resolutions designed to address, in the short term, the limitations the law places on the operations. He complained about not having a seat at the table while the final drafting of the Cooperatives Societies Act was taking place, and said when the bill was being discussed in Parliament, the SJCCU had requested a copy, but did not get one.

Since the law took effect, the SJCCU has been forced to reduce its credit limit per customer from its customary $300,000 to just over $100,000.

Thursday’s meeting was called to give the board of directors the green light to increase the share capital from $1 M to $3 M. This would allow the organisation to revert to its $300,000 credit limit.

Ephraim said the SJCCU has lost money since it has had to turn down several loans because of the new limits. He noted that the new law increases the Financial Services Regulatory Commission’s role in monitoring credit unions.


“I am not against oversight, but I believe that the new legislation has the effect of placing us in a straitjacket, and I fear that now we are being over-regulated,” he said.

Both resolutions were adopted by large majorities. They take effect on October 31.

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