bccull get involved magazine issue 1

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pg. 3 GET INVOLVED: OCT 2011 Barbados Co-operative & Credit Union League Ltd.

WELCOME The Barbados Co-operative & Credit Union League is pleased to

bring you the first issue of our

We are operating in a quickly changing financial environment and it is essentiial for Credit Unions to be equipped with the necessary knowledge to function efficiently and effectively.

To this end, The League has developed this publication to keep you abreast of what is happening in the co-operative world - locally, regionally and worldwide.

The magazine will be published on a quarterly basis in an electronic format.

We encourage you to GET INVOLVED by not only reading the contents but by submitting your own photos, articles or suggestions for articles so that we are better able to meet your needs. As usual we look forward to receiving your support and feedback regarding this initiative. Happy Reading!

mmarshallSound AttachmentSound Clip (172 KB)


WELCOME The Barbados Co-operative & Credit Union League (BCCULL) Ltd. is pleased to

bring to you the first issue of

This quarterly, electronic magazine is intended to help Co-operatives to acquire the knowledge necessary to deal with a rapidly changing financial environment; regulation and supervision of credit unions. We will endeavour to bring you news/ articles which keep you abreast of whats happening in the world of co-operatives - locally, regionally and worldwide. We look forward to your feedback and urge you to Get Involved by sending us your photos, articles and article suggestions for publication.

The Annual General Meeting of the Barbados Co-operative & Credit Union League Ltd.

is scheduled to take place

29th October 2011 Lloyd Erskine

Sandiford Centre, Two Mile Hill, St. Michael

3:00. p.m.


Credit Unions Building A Better World International Credit Union Day - 20 October 2011 This year Credit Unions across the world celebrate International Credit Union Day under the theme, Credit Unions Build a Better World. This theme recognizes the significant contributions Credit Unions have made and continue to make to the social and economic development of individuals and communities across the world. Worldwide more than 184 million people have chosen the credit union brand for the provision of their financial services. In particular, Barbados boasts a membership of more than 150,000 persons registered across our 33 Credit Unions. Today, we are indeed proud of our achievements in facilitating the economic enfranchisement of ordinary Barbadians by placing people before profits, and providing easier access to loans and other financial services. Credit Unions have continued to provide lower loan rates and good service even in light of the current financial crisis. The prudent financial management demonstrated by Credit Union Executives and Staff, and the personalized service approach to members has resulted in the movement recording a savings growth rate of 7.89

%, and a loan growth rate of 8.56% for the 12-month period ended June 30, 2011. These growth rates are highly commendable, in the midst of this great economic recession. Of global significance, the United Nations will be launching the International Year of Co-operatives (IYC) on October 30, 2011, in celebration of the contribution of Co-operatives. Barbados will join in these year-long activities to highlight the achievements and successes of our very own Co-operatives but more importantly we will be promoting the uniqueness of Co-operatives at all levels of our society. Credit Unions have undoubtedly been a tremendous success story, it is hoped that IYC 2012 activities will be the catalyst for the further development and growth of non-financial co-operatives here in Barbados.

The Board of Directors of the Barbados Co-operative & Credit Union League Limited (BCCUL), extend sincere thanks and well wishes to all credit union executives, staff, and members on this International Credit Union Day

Hally Haynes President, BCCULL

What did your Credit Union do to celebrate ICU Day?

Tell us about your activities so that they can be featured in the next edition! Email your text and photos to us at [email protected]


CUNA CEO Bill Cheney Addresses Credit Union Members CUNA CEO Bill Cheney has a special ICU Day message for your members, and we'd like you to pass it on for him! In a video wishing each credit union member around the world the best on ICU Day, he explains the co-operative aspects of credit unions: they are about people, not profit. Says Bill, "We have a philosophy in the credit union movement thats been with us for over 75 years, and thats

'people helping people,' and thats not just a catch-phrase, thats what credit unions do. They pool your resources to build better communities and to help you have a better and stronger financial well-being." He also introduces credit union members to the 2012 International Year of Cooperatives

and ties that United Nations designation back to credit unions, since they are financial cooperatives. He ends in affirming the belief that credit unions build a better world and thanks members for being a part of that effort. http://www.cuna.org/finlit/icuday_cheney_member_1011.html

Please share this video on your websites and promote it through any online

communications you may use to interact with members.

Joanne Sepich ICU Day Coordinator Credit Union National Association (CUNA) Phone: 608-231-4867 or 800-356-9655, ext. 4867 (out Mondays) Email: [email protected]


CCCUs President Yvonne Ridguard Harris ICU Day Message Fellow Co-operators, Happy International Credit Union Day!!! Today we join together to celebrate the Credit Union difference and to recognise the contributions that Credit Unions make every day to the lives of their members and communities worldwide. The Caribbean Credit Union sector comprising over 360 Credit Unions, are a part of the over 49,000 Credit Unions in 97 countries around the world, with over 184 million members celebrating International Credit Union Day. September 12, 1941, saw the birth of the first Credit Union in the Caribbean, the Clerks Credit Union Ltd. in Jamaica. Since 1948, Credit Unions in the Caribbean and around the world, have come together annually on the third Thursday in October, to commemorate the Movements history and achievements. (continued on page 5)


For over 70 years, the Credit Union Movement within the Caribbean have been providing their members with access to affordable financial services and creating and redistributing wealth across the region. Notwithstanding the unpredictable and often times, harsh economic climate, the sector has achieved significant growth and now boasts US$4.2 billion in assets with over 2.1 million members!!! This growth has caused our respective Governments and peoples to recognise the importance of Credit Unions within the Financial Sector, resulting in new Legislation and/or Regulations throughout the Region. Collectively, whether our members are rich or poor, from villages or cities, in communities at peace or in conflict, Credit Unions are helping their members every day to create new opportunities for growth and development. This year, our theme

Credit Unions Build a Better World

celebrates the important economic and social contributions, that Credit Unions make to their communities worldwide. Credit Unions are very different indeed, both in philosophy and structure to their traditional for-profit financial competitors. Community commitment and positive

economic and social change, are just two of the important differences. Credit Unions invest their earnings in helping members meet their financial goals. For more than 150 years, Credit Unions worldwide have proudly put people before profits in order to provide their members with access to affordable financial services. Credit Unions have consistently carried on the traditions set forth by their founders and exemplify the values of thrift, self-sufficiency and volunteer leadership, democratically elected from amongst their members. These qualities help Credit Unions create a special place for themselves among the worlds financial institutions. In the spirit of International Credit Union Day, let us look beyond our local community and region, to recognise Credit Unions for the important role they play in many distressed urban and rural areas worldwide. Many persons would not have been able to afford to own homes, start new businesses or attend school without the help of their Credit Union. In some areas of the world, people would not have access to financial services at all, without their Credit Union. As we look forward to the launch of International Year of Co-operatives 2012 on October 31st, we have much to celebrate on the continued importance of the Credit Union Business Model to the socio economic development of the Caribbean and many other Countries within the world.

Yvonne Ridguard Harris President, CCCU


Financial Services Commission The Financial Services Commission Act 2010 was enacted by the Parliament of Barbados to provide for the establishment of the Financial Services Commission which is expected to regulate the financial services sector other than banking services, i.e. Credit Unions as defined under section 193 of the Co-operative Societies Act, will now be regulated by the newly established Financial Services Commission. Specifically, functions of the Commission are:

1. To be responsible for the administration of the specified enactments, including the licensing or registration, as the case may be, of financial institutions;

2. To supervise and regulate the operation of financial institutions; 3. To establish standards for institutional strengthening, for the control and management of risk in

the financial services sector and for the protection of customers of financial institutions as well as creditors and the public;

4. To issue guidelines in accordance with section 53; 5. To promote stability, public awareness and public confidence in the operations of financial

institutions; 6. To increase the competitiveness of the financial services sector; 7. To advise the Minister in respect of matters relating to the Act; 8. To provide technical assistance and advice to the International Business Unit or to any other

Government agency in relation to its responsibilities under any law to supervise, regulate or monitor any business operating in Barbados; and

9. To do such things as are necessary to effectively carry out the purposes of the Act.

Image: worradmu / FreeDigitalPhotos.net


With the introduction of the Financial Services Commission (FSC) to the local regulatory framework now more than ever Credit Unions need to stay alert!

1. Research - As the old saying goes Knowledge is Power! Stay abreast of any changes that are occurring in the industry. It is essential that you research new legislation and requirements.

2. Review your Policies and Procedures - Are they in alignment with regulatory requirements? If so, then wonderful! If not put a plan in place to get them up-to-date.

3. Report - Ensure that you always meet deadlines for submission of any reports. Remember Murphys Law- Anything that can go wrong will go wrong"- do not wait until the last minute to compile information or gather signatures.

4. Improve Your Knowledge/Skills - Look out for Training Opportunities/ Seminars as these will help you remain current and alert.

5. Communicate - Establish internal lines of communication to ensure that at every level the importance of meeting requirements are understood. It is also helpful to form a relationship with key personnel at the League and the FSC to ensure that they are aware of your efforts and can provide guidance and information as it is required.

Are you a small Credit Union in need of help to meet FSC regulations? Contact us at [email protected]

Financial Services Commission

Presentation to Credit UnionsSeptember 15, 2011By Anthony Pilgrim General Manager, BCCULLAt the LESC on Two Mile Hill

Origin of FSCBasic outline of new regulatory architectureProposed structure of FSCHighlights from FSC ActOrganization of FSC StaffRequirements of FSCAuditor and related issuesState of Credit Union MovementNext Steps for Credit UnionsQuestions

Content

Origin

Maxwell Stamp Report on NBFIs (May 1997)

Financial Sector Reform Project Report by Lawrie Savage & Associates Inc. (Jan. 2006)

Financial Services Commission

Financial crisis has given new impetus and urgency to regulatory reformsPressure from multilaterals such as IMF, World Bank and IDB etc.International trend consolidation of regulatory structures to achieve economies of scale and scope

Recent Events

Two Regulators for Financial Institutions

Central Bank will continue to regulate banks, finance companies etc.

FSC to regulate NBFIs i.e. insurance companies & pensions, credit unions and securities.

Please note that Registrar of Co-operatives will regulate non-financial co-operatives

Barbados Model

Jamaica, Trinidad and Belize have moved or are moving in the direction of the Central Bank being the single regulator for financial institutionsOECS sub-region is moving more in line with the Barbados model Bahamas similar to Barbados and OECS except that credit unions will be regulated by Central Bank and not Commission

Regional Models

The FSC Act was proclaimed on April 1, 2011.

FSC as an institution came into existence on April 2, 2011 after proclamation of said Act by the Governor General.

FSC Act 2010-21

To be responsible for the administration of the specified enactments, including the licensing or registration, as the case may be, of financial institutionsTo supervise and regulate the operation of financial institutionsTo establish standards for institutional strengthening, for the control and management of risk, for the protection of customers (members) of financial institutions as well as creditors and the general public

Functions of Commission Sec.4

To increase the competitiveness of the financial services sectorTo issue guidelines in accordance with Section 53To promote stability, public awareness and public confidence in the operations of financial institutions

Functions Contd

FSC to administer relevant Acts (where there is conflict FSC legislation will prevail)FSC can seize the management and control of an institution, appoint a manager or take any other necessary action, for the purpose of protecting the interest of customersFSC has broad exemption powers (can exempt any institution from compliance with any requirement in its absolute discretion)Give directives to ensure compliance and safety and soundness

Powers of Commission - Sec.8 & Sec. 25

Exercise any of the powers exercisable by the regulatory authorities under the specified enactments before the commencement of this ActInvestigate the affairs of a financial institutionAfter consultation with Minister, suspend, cancel registration or revoke license if in opinion of Commission, a financial institution is not maintaining high standards of financial probity or has committed serious breach of Act etc.

Powers Contd

11

The Board comprises seven persons appointed by the Minister of Finance:Chairman, Professor Frank Alleyne; other Directors are Jefferson Cumberbatch, Debbie Fraser, Lawson Yearwood, Felton Burton, Margaret Sivers (ex officio), and Basil Murray (former Registrar of Co-ops.)

FSC Board

DivisionsCredit Unions and SecuritiesInsurance (including responsibility for pensions)

Senior Staff Appointments (selective)Interim CEO (6 months) Virginia MappManager of Credit Unions and Securities Division (6 months contract) Betty Alleyne-HeadleyAnalyst (6 month contract) - Curtis Lowe Examiner (6 month contract) Stuart Pollard

FSC Divisions and Senior Staff

To Monitor, Review and Categorize Watch list Credit UnionsBuild a data base for collecting key credit union financial informationThe FSC plan is to have credit unions report electronicallyThe FSC will be very stringent on credit unions reporting on time or face fines

Analysts Responsibilities

The commission may, after consultation with financial institutions issue guidelines for the purpose of:Establishing codes of conduct to govern the financial services sectorModernizing the financial services sectorPromoting international standards and best practisesThe detection, prevention and deterrence of money launderingThe detection of funds allocated or used for the financing of terrorism contrary to section 4 of the Anti-Terrorism Act

Guidelines - Sec.53

Financial institutions to furnish quarterly a financial statement (electronic format), and;Any other information necessary for the understanding of the financial statementIn addition: Any information the Commission considers necessary in respect of holding company, subsidiary, or affiliate of financial institution

Submission of Information - Sec.10

Sec. 11 states:

The FSC must approve the external auditor of the credit unionEvery Credit Union must submit their auditors for approval (prior to AGM)It is the duty of the auditor to note in his report and to report to the Commission any instances where the operations of the financial institution might not in his opinion be in compliance with the requirements of this Act, the regulations, the guidelines or the specified enactments.

Credit Union External Auditor Sec 11

It is noted that the relevant section states as follows:

The auditor of a society is entitled to receive notice of every meeting of the members of the society, and at the expense of the society, to attend and be heard at the meeting on matters relating to his duties as auditor.

Auditors Right to Notice - Sec. 120 of Cap. 378

The FSC is expected to more vigorously enforce the stipulations in the Act regarding the time frame for the convening of AGMs.

Please also note that requests for extensions and the reasons given will be scrutinised.

Do not blame lateness on the auditor if it is not his fault, the FSC will contact him and hear his side.

Convening of AGM - Sec. 86 of Cap.378

Appoint Appeals Tribunal (may be divided into Divisions) Sec. 26Appoint experts on such terms and conditions as approved by Minister as it considers necessary to assist in such matters as it determines Sec. 43Impose charges to meet examination expenses Sec. 24With approval of Minister make Regulations Sec. 54

Other Responsibilities

ProfitabilityLiquidityCapitalRisk ExposureGrowth

FSC to Monitor Credit Union Performance in (5) Key Performance Areas at a minimum

Profitability Goal Minimum 1% - Net Profit/ Average AssetsLiquidity Goal 75% - 85%, Total Outstanding Loans/AssetsCapital Goal 10% of Total AssetsDelinquency Goal 90 days/Total Outstanding LoansGrowth Goal - Inflation Rate

Key Performance Areas

As at March 31, 2011

Assets $1,460,196,469Loans $1,139,316,724 (78%)Reserves* $135,673,478 (9.3%)Loans > 3 Mths Arrears $79,379,134 (6.97%)All. Dbtful Loans $25,900,116 (2.27%)All. Based on PEARLS $52,226,549(4.58%)

*Reserves = Stat. Reserves + Retained Earnings

Barbados Credit Union System

Analysis of Delinquency

# of Credit Unions

% of Total Number

Delinquency Profile

Comment

11

31.4%6

< 5%

Within benchmark

6

17.1%

5% and < 10%

Concern

6

17.1%

10% and < 20%

Serious Concern

12

34.3%

20%

Critical

Six credit unions have delinquency rates of 40% or above.

Credit Unions not making adequate provisions. It is anticipated that there will be guidelines in respect of loan loss provisions.

PEARLS (Loan Loss Provision Guidelines) 3 12 months 35%Over 12 months-100%

Loan Loss Provisions

FSC will require detailed policies in:Credit RiskOperating (Operational) RiskLiquidity RiskCapital Adequacy (solvency)Market (Investment) Risk)Money Laundering Business ContinuityCorporate GovernanceThe degree of detail in the policies will be relative to the size and complexity of the Credit Union

Credit Union Policies

Too few credit unions have strategic plans.

All credit unions should have 3-5 yr strategic plans

Plans should be appropriate to the size and complexity of the institution

Management of Strategic Risks

The FSC is still very much a work in progress. A CEO has to be appointed as well as other staff.

It is anticipated that within 12 months, FSC will be fully staffed and functional.

This transitioning period should be used wisely.

Next Steps for Credit Unions

The FSC has significant enforcement powers which will be exercised to protect the interest of members.This regulatory authority can be expected to seize the management of credit unions to protect the interest of members. Financial institutions that do not meet the standards over time can expect to have their registrations cancelled and or licenses revoked.

New Game in Town

Section

Breach/Offence

Penalty

Sec.19

Not producing information for examiner

Fine $50,000 or imprisonment for 1 yr or both

Sec. 22

Tampering with evidence

Fine $100,000 or imprisonment for 5 yrs or both

Sec. 23

Obstruction of auditor or examiner

Fine $200,000 or imprisonment for 5 yrs or both

Sec.10

Failure to submit (financial) information

Fine of $100,000 or imprisonment for 2 yrs or both

Penalties

IN THIS NEW REGULATORY DISPENSATION, THERE WILL BE SERIOUS CONSEQUENCES FOR ANY FINANCIAL INSTITUTION THAT DOES NOT MEET STANDARDS.

Do nothing approach is not an option.

Key Takeaway Message

Credit unions must act now to put their houses in order.Take full advantage of any technical help that is available.Do not be overwhelmed by new regulatory requirements, prioritise areas of weakness that require attention and action.

Next Steps

Questions ???

mmarshallFile Attachmentpresentation to affiliates september 2011 re FSC matters.pptx


Does the thought of providing excellent service leave you puzzled or confused? Then we are here to help you! The type of service you offer can make or break your Credit Union so it is essential to get it right the first time. Customer Service is all that your Credit Union does to meet customer expectations and produce customer satisfaction. There are three critical components

Defect free products/ service,

Timeliness, CARING.

Defect Free Products/Service: Faulty products or shabby service delivery is guaranteed to annoy

your members. You must consistently and efficiently deliver what your members need. Pay attention; gather as much information as possible so that you can meet both stated and unstated member needs. Timeliness: As service providers you need to respect your members time. Show your customers that you are interested in serving them by

responding promptly

to their requests. Caring: Your members are looking for TLC from you, that is, they need you to always put yourselves in their shoes and Think Like A Customer. Stop and ask yourself what would I expect

from a transaction, what would make me happy, what would make this moment memorable. In order to deliver service which is consistently defect free, timely and caring, efforts must be made to lay a strong Customer Service foundation. Credit Union Leaders must establish a vision for the type of customer service culture they wish to create. Once you have a clear vision work together to agree and clearly communicate your values, service standards and expectations to encourage the growth of your customer service culture. If you need help solving the customer service puzzle and getting on target, contact us at [email protected] .

Image: sheelamohan / FreeDigitalPhotos.net


TRAINING Whats Scheduled

Home & Land Investment 22 October

9am to 12pm This presentation is targeted at all those individuals contemplating the purchase of a home and land. It is widely accepted that investment in a home is perhaps one of the single most substantial forms of investment an individual will make in his/her lifetime. Course Category: Personal Interest Presentation

Regulatory Compliance 2: Plugging Money Laundering Vulnerabilities in

the Credit Union Movement 29 October

9am to 12pm This day session seeks to ensure that the credit union fraternity are institutionally equipped to address the issues of regulatory and reputational risk which may arise from incidents of money laundering, fraud and terrorist financing. Course Category: Compliance, Lending & Collections

Delinquency Management

5 November 9am to 4pm

High levels of delinquency reduce profitability and negatively impact institutional capital. If unchecked it will ultimately undermine the financial health of the financial co-operative. Management of delinquency should commence at the loan application stage and follow through to the final payment. Course Category: Compliance, Lending & Collections

Business Communication Made Simple 12 November 9am to 4pm

Whether a business organization is successful depends largely on the behaviour of the people in that organization. This one-day session focuses on techniques used in communicating. Course Category: Business Development, Administration & Service

Performance Management 19 November 9am to 4pm

Performance Management and Appraisals tends to be one of those essentials in a

company that is often handled badly or not at all. These functions are important in order to provide employees with feedback that can assist them in understanding their roles

and encourage them to review, maintain or improve the quality of their work. Course Category: Business Development, Administration & Service

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Contact us at: BARBADOS CO-OPERATIVE & CREDIT UNION LEAGUE LTD.

Hadley Court Upper Collymore Rock St. Michael

Tel: 246-429-7075 Fax: 246-436-5848

Email: [email protected] Visit our website: www.barbadoscoopleague.org

bccull get involved magazine issue 1

Documents

credit union executives

credit union brand

supervision of credit

year credit unions

cooperative world

financial services

prudent financial management

current financial crisis