Credit Union Technocracy

Technocracy is replacing democracy in our credit union world. The proud claims to consumer co-operative ownership are hollowing. The roles for member-owners and their representatives (elected directors) have narrowed. These changes have political and other implications.

Our recent BC Advocacy Day delegation reflected the changing nature of our BC credit union system. Credit union executives and government relations professionals heavily outnumbered the few directors.

On a broader level, not one elected credit union director sits on the board of the Canadian Credit Union Association (CCUA). By contrast, the Desjardins federation reserves 2/3 of the regional council seats for volunteer directors from the caisse populaires. The board at Federated Co-op Ltd is dominated by those who sit as directors at the local level.

At Central 1 the trend is also evident, though some credit union directors still sit on the Central 1 board. However, proposals from the recent governance review would further erode the number of positions set aside for those representing credit unions – in favour of those with ‘technical expertise’.

Conceptually and fundamentally credit unions are political projects. Each credit union is an expression of the will of a community, of people, to provide certain services for themselves. The co-op model of consumer ownership is what makes these enterprises unique. But as with all democratic models, vigilance is required. Democratic models are vulnerable.

Member-Ownership Reshaped

Other democratic organizations would certainly be represented by their elected leaders in Victoria – be they the Union of BC Municipalities, the Union of BC Indian Chiefs, or the Federation of Labour. But credit unions drift another direction.

Increasingly credit unions behave more like business groups, where senior managers assume the lead in communications with government ministers and MLAs. The CCUA is called a ‘trade association’, not a second tier co-op or a federation. This framing of the ‘government relations’ entity diminishes the role of elected directors.

And credit union directors are increasingly redefined as risk managers rather than representatives of member-shareholders. This mirrors a practice in the corporate investor-ownership sector.

With credit union consolidation, FICOM and many others have expressed concerns that lay people on boards cannot supply the ‘skills’ required. But I note that such arguments are not used to preclude ordinary people from running for the provincial legislature, city councils, school boards, parks boards, or the boards of numerous community organisations. Yet credit unions are singled out.

And so the expectations of directors shift. Much emphasis is placed risk management, and the client-service interface, and too little on the member-owner interface. The number of directors decline, member participation rates drop off. As a system we have a less vital democratic core.

This all results in an enhanced role for executive management, ministry officials, and regulators; technocrats. This may be fine, so far as it goes, but what is the trade-off?

One big trade-off is in the political arena. Technocrats cannot deliver votes. This was the key takeaway from my recent BC Advocacy Day experience. Legislators want to have the support of community leaders, those who may have influence in electoral politics. That political leverage was barely visible.

To a lesser degree government was looking for support in delivering on its agenda. There may be a place for technocratic negotiation on this front.

Imminent changes in BC legislation reflect government’s technocratic shift. Far more authority will be delegated to government technocrats – the board of the new Financial Services Authority (FSA) and officials. Most particularly the FSA will have delegated rule-making authority.

Do we leave it to the technocrats to ‘work things out’, or do we resuscitate our special ownership model and the political leverage that an engaged membership affords us? Are executive managers prepared to share more of the responsibility? How do we find the right balance?

photo: MLA’s Janet Routledge and Garry Begg, with Ross Gentleman May 29, 2019

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