Registrar of Credit Unions addresses the on-going restructuring of the sector at Credit Union Managers’ Spring Conference

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• The sector has moved significantly on the need for restructuring, with momentum and activity continuing.
• Thematic Reviews for 2016 include examinations of outsourcing arrangements and aspects of the Fitness & Probity process.
• The Registry does not seek to constrain business models, but to ensure that proposed developments are carefully assessed.

Speaking at the Credit Union Managers’ Association Spring Conference today, Registrar of Credit Unions, Anne Marie McKiernan, focused on the ongoing restructuring of the sector and the importance of taking the steps necessary to reap benefits from mergers that have already been completed.

She updated on the supervision of merged credit unions and set out the Thematic Reviews to be conducted by the Registry of Credit Unions in 2016. She spoke about the implementation of the new Credit Union Regulations in addition to outlining her views on the development of appropriate, viable and sustainable business models.

On the trends emerging at this stage in the restructuring cycle, she said “more mid-sized credit unions are assessing merger opportunities, including with each other, and some proposed link-ups present special challenges regarding clarity of leadership, governance and strategic focus going forward”.

In instances where the credit union’s business model is no longer viable, she stressed that “it is not acceptable for credit unions to wait until they are approaching regulatory reserve minima before prompting necessary action”. She acknowledged that while these are hard decisions for boards to take, “it has the benefit of bringing a realistic focus on future viability and introduces clarity about the future”.

Ms McKiernan reiterated comments made previously that the Registry of Credit Unions does not have a desired target number of credit unions but that there is an implicit target state, “where credit unions are resilient and viable on a forward-looking basis, and are providing the services that members want via the channels that members expect”.
On credit unions that have already been through a transfer process, the Registrar noted it is “vitally important to use the potential for financial and operational efficiencies, and the broader capabilities of merged entities, to continue to attract younger active members and to facilitate business model development.”

Speaking about on the Registry’s Thematic Reviews for 2016, the Registrar indicated that they will included an examination of the management of outsourced activities, and a review of aspects of the Fitness & Probity process.

Ms McKiernan finished by addressing the issue of business model development and the role of the Registry. She said the future path for the sector, whether it “involves wide scale consolidation, further restructuring and the development of a variety of business models or confederation, it will be up to credit unions to take the decisions and to manage the risks involved.”

She stressed it is not the role of the Registry to constrain business models, but to ensure that proposed developments are carefully assessed. She noted that “where credit unions set out a clear path on how they wish to develop, we will consider any amendments to the regulations that may be appropriate.”