The issue which has erupted about whether credit unions have been directed by the Financial Services Commission (FSC) to shift deposits held with non banks to commercial banks continues to gain momentum. The President of the Barbados Economic Society Ryan Straughn added his voice today. The unravelling saga has raised several issues which should concern Barbadians whether members of the credit unions or not.
The Barbados Co-operative and Credit Union League (BCCUL) is the umbrella body of credit unions in Barbados and should be the only entity making statements on the matter. The matter which is playing out in the media makes it seem that it is a City of Bridgetown and Financial Services Commission affair. Of concern to many is the statement issued by the BCCUL which was reported in the Barbados Today “…further, the Barbados Co-operative & Credit Union League Ltd., the apex body for credit unions and co-operatives in Barbados, totally rejects the notion of any ongoing row between the FSC and credit unions on this or any other issue. The pertinent facts surrounding the issue are as summarised below”.
For anyone to suggest that the FSC has issued a directive to force credit unions to transfer all deposits held with non bank institutions to banks in order to force a take up of government treasuries is speculative at this stage. BU is willing to be proved wrong. Further, BU has had a look at the Co-operative Societies Act Section 34A and the law supports the fact that credit unions must be placed funds with banks or other credit unions regulated by the Act.
What it says to BU is that we should be also asking why under the old dispensation credit unions were allowed to contravene the Act. We have been critical of the Office of the Supervisor and its weak supervision of CLICO Insurance Ltd. Should we be similarly critical of the former Registrar of Cooperatives?
Here is what the Act states:
34A. (1) The funds of a society, including the reserve, may
(a) be deposited in
(i) a bank licensed under the Financial Institutions Act;
(ii) a society registered under this Act; or
(b) be invested in
(i) securities issued by the Government of Barbados;
(ii) securities, the payment of interest on which is guaranteed
by the Government of Barbados;
(iii) subject to subsection (2), securities issued in Barbados
by a company incorporated in Barbados and listed by the
Barbados Stock Exchange, if the company has paid a
dividend on its shares for the preceding 5 consecutive
(iv) subject to subsection (2), securities issued in a member
state of the Caribbean Community by a company
incorporated in that member state and listed by the Stock
Exchange of a member state of the Community, if the
company has paid a dividend on its shares for the
preceding 5 consecutive years;