In the 2020/21 Budget Statement, Finance Minister Imbert had little to say about credit unions, limiting himself to reporting that 50 business owners had received concessionary loans through the Credit Union Loan Facility at a cost of $382,000 and to encouraging credit unions to exercise ‘forbearance’ in ‘maintaining the flow of credit’.
But in the 2019/20 statement, he had more to say. In a four-paragraph section on co-operative societies, he promised to do three things that have long been desired by credit unions: 1) ‘amend the Co-operative Societies Act [Chap 81:03] to increase the current limit of $5,000 imposed on the transfer of shares or interest payable to a nominated beneficiary upon the death of a member to $50,000’; 2) ‘take steps to put in place the appropriate machinery to provide for the payment of utility bills by co-operative societies and credit unions’; and 3) ‘create a new independent authority to govern the co-operative sector.’
These promises originated from proposals made by the Credit Union leadership, who, along with their memberships, welcomed them even though we would have liked to have more. For instance, we would have preferred, in respect of the first-mentioned promise, total abolition of the limit on the transfer of funds instead of the increase to $50,000, better though it is than the original state of affairs.
In 1971, when the act came into being, $5,000–traditionally usable for funeral expenses for the deceased–must have been more valuable than $50,000 is today. But why, in the presence of the deceased’s clear nomination of a beneficiary, impose a limit at all and force the beneficiary to pay a lawyer extortionary sums to have the matter probated?
There is a hint in the relevant section, 41(3), that the question of ensuring fair inheritance and paying estate duty might be the bugbears. ‘All other moneys due to the deceased member from the society,’ the section says, ‘shall fall into his estate and be subject in all respects to the laws relating to inheritance including the requirement to pay estate duty.’
But we welcomed the change and the Government did keep its promise to amend the Cooperative Societies Act–via clause 6 of The Finance Act, 2019–simply changing ‘five thousand dollars’ to ‘fifty thousand dollars’.
But that’s the only promise kept. So far. The second promise–to enable cooperative societies and credit unions to pay utility bills on behalf of their members by putting the appropriate machinery in place–seems to have gone begging for an entire year. The banks have been giving their members that service for years. So what’s keeping the Government?
The other promise not kept is that of establishing an ‘independent Cooperative Authority’ to regulate the Cooperative Movement. It is without a doubt the most important promise, if only because of a very big expectation: the ability to offer banking services, including encashment of government cheques, without undue hindrance. According to Imbert, ‘After the new entity is established, financial credit unions will now be able to offer banking or quasi-banking services, such as encashment of cheques and teller services.’
Now, credit unions have been calling for a licence to set up their own bank and end some of the dependency on the commercial banks owned by the one-percenters. But they will settle for the promised ability to offer banking and quasi-banking services.
They have also been clamouring to encash cheques by legal fiat. However, it must be conceded that some of them, including those operating in Tobago, already encash government cheques–some supermarkets do as well!–making sure to follow the prudence of allowing the cheques to be cleared before handing over the cash. But the Rowley government needs to hurry up and set up the Cooperative Authority to achieve more consistency and credibility in the operations and performance of non-financial cooperatives and credit unions.
For decades now, the Government has been looking to remove all cooperatives from under the supervision of the Commissioner for Cooperative Development to the supervision of some other entity. Persuaded by the view that the Cooperative Department does not have the informational capacity or the technical financial skills to properly oversee the financial operations of cooperatives and credit unions, and dismissing the option of strengthening the department, they have considered the Central Bank and the Ministry of Finance as regulators of the financial affairs of these institutions, with the developmental /training component of their work being left to the commissioner.
Indeed, there has been an abortive experiment to use the MOF, endorsed by the World Council of Credit Unions (WOCCU), if you please, and the People’s Partnership government developed abortive legislation in 2014 to move cooperatives and credit unions from the supervision of the commissioner.
The independent Cooperative Authority is the latest answer. It is a proposal agreed to by both the Cabinet and the leadership of the Cooperative/Credit Union Sector. It will be comprised of seven Board members (three nominated by the sector, three by the Government, and the chairman also by the Government) and report to the MOF. It will be funded by revenue it generates from the sector and by reallocation of subventions from the Cooperative Department. And while I allow that oversight by a Parliamentary Committee would be a superior strategy, I will settle for the Authority for the hour.
An entire year has gone since the agreement and the promise. It’s time for the Authority to be established.
Happy Credit Union Week, everybody!
