Credit union concepts and business principles are not very common in our commercial experiences today. Yet they are such a good example of how consumers ought to be treated.
In contrast to some of my banking experiences I have always found credit union staff to be friendly, knowledgeable and very up front with my interests in mind. They do exist solely to serve their members and not to pay high dividends to share holders. The profits are returned to members, offering higher deposit rates and lower rates on loans. While bank accounts in Canada are insured for $100,000, here in British Columbia credit union accounts are covered for the entire amount.
In 1972 and relocated in a city on the Canadian west coast, I set out to cash my first paycheck. Arriving at the nearest bank I was informed by the teller that I would need to open an account. In a hurry I walked across the street to the credit union and cashed my check. After the transaction I was pleasantly asked if I wanted to open an account. I did a week later.
A dozen years passed and I was able to start a registered retirement savings plan. Instinctively I headed for the nearest bank, probably influenced by some of their advertising campaigns, and opened an account consisting of equities and mutual funds. As the years passed it seemed that the financial representatives were often too persuasive towards certain funds. After meeting with a bank financial planner with certain trades in mind I sometimes arrived home with something other than what I had intended to purchase - something that I really didn't want.
On one occasion I was interested in acquiring more of the bank's popular conservative income fund but they informed me that I could not do so. It was only open for sales to new accounts only!
Not available to a dear valued customer? Being somewhat upset I emailed my dissatisfaction to the bank's ombudsman. There was no acknowledgement but after re-submitting my complaint two weeks later I then discovered the role of the ombudsman. At least in this instance, it was to forward complaints back to the local branch manager. The manager finally called only to restate what I had already been told - the fund was open to new accounts only. After listening to some persuasions about their choices on other funds that they had to offer, the discussion ended.
The following year I decided to sell all equities and funds and invest in term deposits as, at age 73, I was particularly concerned about a very inflated stock market. It took several visits and insistence on my part but I finally got the job done and had all holdings were sold to cash. Somewhat frustrated and annoyed with the service I finally closed the RRSP turned RRIF account and transferred the funds to my credit union. The credit union's financial advisor politely suggested diversifying but did not apply any persuasions to do so, and the new RRIF now contained only staggered term deposits.
The bank's financial planner later called for an explanation of why I had migrated to the credit union. I explained my concerns about the service and the economy and stated that I wished to invest all in term deposits. When informed that 'they have term deposits too' I stated that the credit union was offering a full 1% more on a 5-year term.
To which he replied; "Well we could find something like that for you."
The World Council of Credit Unions (WOCCU) defines credit unions as "not-for-profit cooperative institutions." In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth. This difference in viewpoints reflects credit unions' unusual organizational structure, which attempts to solve the principal-agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy. More . . . . From Wikipedia, the free encyclopedia: http://en.wikipedia.org/wiki/Credit_union
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