JAMAICA’S credit unions are mobilising their one-million-strong membership against the Bank of Jamaica’s (BOJ) unexpected reversal on a key financial access provision—a move they warn could force reliance on commercial banks and stunt sector growth.

The proposed Specially Authorized Credit Union (SACU) clause, which was scrapped from pending legislation despite earlier BOJ support, would have allowed the Jamaica Cooperative Credit Union League (JCCUL) to process transactions for its 23-member credit unions without using commercial banks as an intermediary.

JCCUL CEO Robin Levy told Jamaica Observer the provision was meant to be a first step towards full financial system access for credit unions when BOJ regulation takes effect.

“As configured, the SACU, this special provision that would allow the league to take credit union deposits, make loans to them and also settle for them, that was the intention. That’s what the SACU really was about,” Levy said. He outlined that JCCUL already takes deposits and makes loans between credit unions. The push now is to ensure it has the same access and can offer similar services offered by other regulated entities like commercial banks and building societies, including, but not limited to, cheque clearing, and foreign currency deposits.

“SACU would have let us settle directly in central bank money — just like commercial banks do,” he continued, referencing access to real-time gross settlement (RTGS) and clearing systems. “We can’t see any reason why credit unions would be singled out to say we will allow banks and building societies, but we can’t do it for credit unions.”

Efforts to get BOJ’s comment on the removal failed.

“The idea is that SACU is a credit union for credit unions. And we are seeing this as a method by which credit unions, if they so choose, can close their bank accounts, and we can keep that business within the credit union movement. We see it as logical, we see it as understandable and doable. Now, the Bank of Jamaica has said, we don’t understand this, we don’t have a policy direction for it, so let’s remove it.”

Levy said since no policy exists for such a venture, JCCUL has proposed drafting one while lobbying ministers to reinstate the measure.

“This model is replicated across the cooperative space across the world, where you have these bank centrals that are credit union banks,” he argued.

Credit union centrals exist in the US and Europe, and cooperative banks operate in other regions. Also known as leagues or associations, they provide back-end support for their member credit unions, including payment processing, online banking, and other operational support. In some countries, like Canada, they also provide services like loan programmes and insurance products.

Levy, cited Citibank Jamaica, which only does business with corporations, as an example of how JCCUL will operate, if it is allowed to become a SACU under the credit union regulations.

“We would only do business with credit unions. So we wouldn’t offer savings accounts or loan accounts to individuals. Our only customers will be credit unions regulated by the Bank of Jamaica and it’s entirely a commercial transaction.

“We are a credit union which has a separate purpose. We’re not in the retail market. We’re not stealing business from credit unions. That’s not the way it is at all. Credit unions are our business and that would be it,” he said.

JCCUL President Andrea Messam, calling the decision to remove the SACU provision “a vexing issue” which will be “vehemently opposed…because we know that its retention, and us being able to conduct our business without having to go through our competitors, is paramount for the growth of this movement,” she pointed out.

That aside, credit union members say they are still not happy with the move for the central bank to take over regulation of the sector.

“We were quite okay during the time when all the banks were in turmoil, and the credit unions stood, and we had a league that was very effective,” one member remarked, calling for JCCUL to “not cave in” to BOJ requests that are inimical to the growth of credit unions.

Robert Tubble, general manager for Trelawny Cooperative Credit Union, said the members would “stand behind” JCCUL “if and when the time comes” to press their position that the credit unions want to have an SACU established.

“We are all here. Our membership is one million, that’s a third of the population. We stand behind you, so if the Bank of Jamaica needs some persuasion, we are here to persuade,” he said.

Campaigning to credit union members to ramp up awareness of the issue is already underway and a position paper has been circulated among credit unions on the matter.

“One thing that we must bear in mind, it is not in the banks’ interest to support us having this, because basically we are different in our operation for banks. We are here for all members. We are not for profit. We are not for charity. But we are here to assist our members to move forward. If we don’t have this SACU, the banks will benefit because our money must pass through them. And they are there for profit and it will actually increase their profitability. Because once the money pass through the banks, then you will have to pay processing fees and all those things,” said Sean Martin, a representative of Essential and Emergency Services and Partners Cooperative Credit Union.

“We have understood that our little 13 per cent of the marketplace is so significant to the banks that they are not going to willingly want to let us go,” Messam acknowledged as she invoked the biblical plea—’Let my people go’—to argue that banks should not restrict credit unions’ financial autonomy.

Credit unions currently have about $190 billion in assets compared to $2.6 trillion for commercial banks.

“For us, however, it is a competitive sticking point. It’s like Popeyes having to market through KFC, and could only sell their chicken through KFC. All of the banks’ fees and costs, all their stipulations for managing accounts with them, add costs and competitiveness to all of our transactions, and we should be able to do them ourselves, like every other entity regulated by the Bank of Jamaica,” Levy reiterated.

“There is no reason why we should be so excluded. And yes, we want to compete with banks. We want to give every Jamaican from every walk of life an alternative to banking. So we should be able to offer every product that banks and building societies offer to our members. There is no reason why we should not be, if we are regulated by the same entity.”

JCCUL vows to lobby for SACU’s reinstatement but is also preparing a fallback plan —applying for a full banking licence if the BOJ refuses to relent.

LEVY…the idea is that SACU is a credit union for credit unions. And we are seeing this as a method by which credit unions, if they so choose, can close their bank accounts, and we can keep that business within the credit union movement.