State and VSECU reach agreement on use of the word "bank"
MONTPELIER – The Vermont State Employees Credit Union (VSECU) and the Vermont Department of Financial Regulation (DFR) announced Oct. 5, 2012, that an agreement has been reached on when VSECU and other state-chartered credit unions can use the words “bank,” “banking” and similar words. Vermont state statutes prohibit credit unions from using such words unless the commissioner of DFR finds the use would not be misleading or confuse consumers as to the nature of the institution.
Under the agreement the credit union will not describe itself as a bank but may use the word “banking” and similar words when advertising its services as long as it discloses that it is a credit union.
DFR Commissioner Stephen Kimbell praised VSECU for its cooperation.
“I want to thank the VSECU for its help in finding a way to reasonably apply a decades-old statute in a rapidly changing environment for financial services,” Kimbell said.
Steven D. Post, CEO of VSECU applauded the decision-making process saying, “This is not a matter of who won or lost a dispute but an example of the state’s regulators and industry working together to solve a problem.”
DFR, which is charged with enforcing the statute, had issued a notice of intent to order the VSECU to stop using the word bank. The credit union then asked for a hearing on the matter.
“This request for a hearing teed up a matter that’s been in discussion for a number of years;” Kimbell said, “it gave us a context in which to reach agreement on how to apply the statute.”
“The credit union is pleased to go forward offering its services to all who work or live in Vermont knowing that it and DFR are on the same page” Post said.
DFR has posted a bulletin on its web site as guidance to all state-chartered credit unions so that a uniform standard can be followed.