The recent acquisition of the CLICO Mortgage & Finance Company by the Barbados Public Workers Co-operative Credit Union marks a very high point in the life of credit unions in this country, and is a move which deserves the full support of all Barbadians.
It can’t be gainsaid that the purchase is a very good business decision and makes a lot of sense at the level of emotional intelligence and self-esteem of the members of the union. We note that with the acquiring of CLICO Mortgage & Finance comes the branch operations in St Lucia with assets of US$72 million.
Given the historical legacy of the vast majority of our people, the significance of owning, managing and running their own financial institutions should not be lost on present and future generations, for the past will on this occasion truly illuminate the future and put in perspective the major achievement that is the local credit union movement.
For many years, long after our emancipation, local savings generated by our people found a home in the commercial banks owned by their metropolitan parent companies, and managed either by expatriates or locals who were not entirely empathetic to the aspirations of local borrowers, whose only security on offer for bank loans was their good intention to repay and their reputation for traditional honesty.
Yet such banks were the only repository for their savings, and the traditional friendly societies like the famous Civic Friendly Society offered only a glimmer of hope in a dark financial forest.It is a compliment therefore to all credit union members and officers past and present, particularly those who manage the unions, that the wisdom of creating their own pool of savings for onlending to members has been so successful. It is also a matter of pride that the current international nightmare into which some financial institutions have become caught up has not in the least affected the local credit movement.
We think that the views of veteran credit unionist Keith Bourne is right on this point. He says that credit unions have a simple formula for survival, and that is that they know who they are getting the money from and they know who they are lending it to.
As we now know the subprime mortgage mess developed partly because many banks no longer knew who were the people buying their mortgage instruments. This brings us to the key question of regulation.
We support the inclusion of the credit unions under the regulatory umbrella of the Financial Services Commission, because we feel that the growth of the credit union movement has long outlived the current regulatory regime.
We must never forget that it was Government-led tax incentive legislation that fuelled the movement’s surge in the late 1970s under Tom Adams as Minister of Finance.
And while over-regulation is neither acceptable nor prudent in a democratic society, the credit union movement has grown to the point where the public interest can now best be protected by continued good management, combined with a modern and informed regulatory system.
In this connection we urge continuous study by the movement itself and also by the Government of the nature of the incentives, and whether they may need to be adjusted in view of the changing financial aspirations of the credit union members, and of the credit union itself.
The acquisition of CLICO Mortgage & Finance brings the Public Workers Co-operative Credit Union closer to the day when consideration may have to be seriously given to the creation of a banking institution; but one that does not forsake the co-operative principles on which the movement is founded.
Indeed Mr Bourne himself envisages such a further development may be next on the cards, given the purchase of the branch of CLICO Mortgage in St Lucia, where we are sure that the “image of success, integrity and financial transparency” will ensure continued growth of this indigenous enterprise.
