The Absent Owners

Too few member-owners in credit unions take a real interest in the politics of their credit union. Few attend membership meetings, few vote in elections, and few challenge the policy directions of board and management. Many credit unions now operate more like independent ‘trusts’ than like entities that are accountable to member-owners. Too frequently directors are acclaimed without elections, or elections are carefully controlled to effectively limit real debates and choices.

In my last blog post I used MEC as an example of the consequences of ambitious growth and the abandonment of local constituencies. But key to that story was the decline in scrutiny by member-owners. In a last minute effort to reclaim the co-op some 130,000 members signed a petition, but that was far too late.

Member-owners have to pay attention earlier and get more involved. Democracy requires vigilance. I have expanded on this in a piece in the Vancouver Sun.

Unfortunately, since each member in a consumer co-op has a very small ‘stake’ in the business, there is only a small incentive for members to get involved and stay involved. This is a unique weakness of the co-op ownership structure.

In addition, some measures in law, and in bylaws, have been introduced over time that may further limit members from asserting ownership interests. Just last year the legislation in BC was amended to increase the number of members needed to compel the calling of a special general meeting, for example.

However, members can do something. In conversation I was recently asked for ideas, and so I thought I’d offer some of those ideas here:

  1. Members can ask questions. These may be put formally at Annual General Meetings, or in correspondence with the board, or in exchanges with individual directors.
  2. Members can organise their own caucus – at a branch level, regionally, or around a specific subject. Social media provide a means by which to recruit others. (Lists of member-owners are confidential so you have to use other means to locate people.)
  3. Members can seek volunteer opportunities – perhaps at a branch advisory committee, or youth committee.
  4. Members can champion ideas and proposals informally to the board of directors; ideas related to financial services, community development, education, governance, business strategy, etc..
  5. Members can raise questions publicly in their community, or on social media, and engage others in discussions about choices to be made in their credit union.
  6. Members can review the credit union’s ‘Rules’ (bylaws), and the Credit Union Incorporation Act & Financial Institutions Act, to fully understand the protocols and procedures that govern the membership meetings, the board of directors, and the respective decision-making authorities.
  7. Members can propose and pass motions at general meetings. Motions may express the will of the membership or request more specific reporting out by the board of directors. While such motions may not necessarily compel the board to take a certain action, a failure to act is open for members to consider at the subsequent meeting.
  8. Members can compel the board to call a general membership meeting (subject to the legislation).
  9. Members can propose changes to the Rules, which, if approved, can compel the board of directors to take certain actions (subject to regulatory approvals).
  10. And members can read more widely in economics and banking to develop a level of literacy in political-economics.

Disaffected and absent member-owners weaken the whole governance structure. Credit unions are political projects with the express purpose of being community-owned. As that base is eroded the institutions are made more vulnerable.

9 thoughts on “The Absent Owners

  1. Your column in The Vancouver Sun today, October 24, does not mention Coast Capital Savings Credit Union.
    Why is that?

    • Coast Capital is no longer part of the BC credit union system. In 2018 they transitioned to become a ‘Federal Credit Union’ under the Bank Act of Canada. While they have a head office in BC, and their original membership base is in BC, they are now able to serve anyone in Canada. Coast Capital is also in a position to merge with credit unions in other provinces.

  2. Thank you for that. I did know they went ‘Federal’ but didn’t realize that meant they left the fold, so to speak, in BC.

  3. In the Vanc. Sun piece you write “… member-owners have largely deferred to directors and managers.” Don’t blame members! The rules are stacked against them. I joined a members revolt at Coast Capital during 2013-2014. Management fought back, we got nowhere. Members cannot elect Directors unless pre-approved. The Board is self-perpetuating, elections a sham and the regulatory agencies are complicit. We fought hard with fantastic people on side, I have a full folder of files. It was all in vain. Your goals are laudatory but impossible to attain.

    • Thanks for your comment Nick. Off the top, I agree with you that the game has been rigged at many credit unions. It is harder than it should be for members to voice their discontent, for members to organise & oppose proposals from the board, and to hold directors accountable. I have great respect for those who challenged the board at Coast Capital as you did. You are correct in saying that directors should be held to account, especially for compromised election processes and the constraints on debate. But it is the members who have to hold these people accountable. It is for that reason that I suggest that members have to assume a greater responsibility (but I concede it is likely easier to say than do).

    • Thanks for this link Larry. The piece is good and provides some key supplementary information. But I think Marc-Andre conveniently avoided the problem that arises as co-ops grow big. A leader’s ‘understanding of co-ops’ is a vague eligibility criteria use. At 5 million members (and one board) MEC was a co-op like no other. Traditional co-op ‘member involvement’ practices were no longer viable. Members had less and less ‘in common’. At this scale, democratic accountability is weakened and regionally defined groups of consumers are no longer in political control of the local enterprise (as is the case in the Federated Co-ops model). I will stop there!

  4. When they removed the hands and globe signage from Central One’s builing at Creekside there was this haunting feeling something had ended. It was the voice of membership. The Board’s voice was muted by management.

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