straight to the point – from different points of view

Regulating Diego Martin Credit Union

Regulating Diego Martin Credit Union

I have to confess that I am more than a little surprised by the feedback generated from my columns sharing my difficulties in dealing with Diego Martin Credit Union (DMCU) and its two principals, Brian Moore and Hamlyn Pantin. I have been writing weekly and/or monthly columns both in the UK and here for three decades and have never previously been a central character in my writings. What surprised me the most is the fact that so many other borrowers either had similar encounters or were concerned to find out more in order to avoid ending up in a similar situation.

The two questions I have heard most often are “is this behaviour of DMCU typical across all Credit Unions?” and “is the Regulator as useless and ineffective as this incident portrays them?”. Today I will try to answer those questions, hopefully in a manner that will assist my readers in deciding whether to transact business with the Credit Union movement at large and with DMCU in particular. Along the way I will share my opinion on the very obvious failure of the Regulator and what must be done about it.

Is the abject disregard for client rights and signed agreements that thrive at DMCU common to most Credit Unions? Are they an outlier, behaving in ways that would never cross the minds of other Credit Unions? On the basis of my previous experience and the replies I have had from readers, it does appear that the folks at DMCU are largely on their own. Of all those who contacted me, only two had problems elsewhere and those were quickly resolved with no stubborn contempt shown to the clients.

There is no publicly accessible data on the number of complaints against Credit Unions or how they were resolved, if indeed they were resolved. I’ve said before that such data should be published as a public service to users of Credit Unions and other financial institutions. After all, they publish your data and share your credit score among themselves.

The reality from my viewpoint is that Credit Unions at large are responsibly run and are trustworthy custodians of your money. I say this on the basis of having observed the movement for a little over a decade. You will find that I have been a vocal advocate for the movement down the years. DMCU has not caused me to change my opinion of Credit Unions at large and I would encourage you to continue to do business with them.

There is clearly a problem though with the nature of the reaction of the rest of the movement and of the regulator to the trouble at DMCU. If we are to continue to place our trust in Credit Unions, then we absolutely must be able to rely on the Regulator to rein in bad actors like DMCU. Likewise, the Credit Union League, the “trade body” to the movement cannot afford to hide in shadows and wait for the Regulator to act. It must be seen to sanction member unions like DMCU who engage in activities against client interests and which sully the name of every other Credit Union.

The Regulator presumably has legal and regulatory powers at its disposal. I have not seen them use any in the face of errant behaviour by DMCU. If they claim instead that they do not have power to act in a situation like this, then they serve no purpose other than to mislead clients into believing that their complaints are being dealt with. We need to hear from the Regulator as to what powers they have to protect consumer rights and to ensure that Credit Unions operate within the guardrails of their regulations.

I have to digress a bit here to remind you that a few short years ago, there was an attempt to move responsibility for regulating the movement from the Commissioner of Cooperatives to the Central Bank. That was part of a larger project that reviewed the very rules and regulations under which Credit Unions would henceforth operate. Those changes would have had the effect of forcing Credit Unions to work more like banks and other very heavily regulated financial institutions.

I was and still am, opposed to the enactment of legislation that would result in Credit Unions becoming banks in everything but name. There is a very important place in the financial service sector for Credit Unions precisely because they are subject to somewhat different rules and regulations. I believe that there are clear distinctions that need to be made on their behalf. Banks aren’t the ideal financial vehicle for all citizens and there are therefore important reasons for resisting the temptation to turn them into banks.

For that reason I have advocated strongly in support of keeping Credit Unions outside of strict banking style regulations and out of the reach of regulators at the Central Bank. My issue was not with the identity of the regulator, be it the Central Bank or the Commissioner of Cooperatives. My fear was that a regulatory regime was being suggested for them that was inappropriate in light of the services they offer and the clients they serve. I vocally resisted the drive to place the movement fully under the control of the Central Bank.

I now find myself disappointed by the failure of the existing regulator to exercise even the lowest level of regulatory control over DMCU. I cannot imagine that the Central Bank would permit the naked abuse that has occurred here. There is clear need to act and they have failed. I cannot help but think that we need a new, more capable regulator for the sector. By continuing under the umbrella of the Commissioner of Cooperatives, Credit Unions have given their management teams the freedom to act in any way they see fit, legal or not.

You will recall that I said earlier that there were moves to place the movement under new, more competent regulatory control from the Central Bank. The failure to do so has been a critical enabler to DMCU in its ability to abuse its power to the detriment of clients like me. They have benefited from the hard and persistent work of members of the movement who lobbied tirelessly to keep regulatory powers where they were.

Would it surprise you to discover that the most active and vocal member of the movement in keeping regulation under the Commissioner of Cooperatives was Brian Moore, the President of DMCU? What a coincidence that he and Hamlyn Pantin have been able to escape scrutiny of their actions because of the weak regulator that he worked so hard to keep in place? Coincidence?

My answer to the two questions posed at the beginning are –

  1. Continue to deal with Credit Unions you are familiar with and
  2. Be mindful that the regulator is either unwilling or unable to assist with complaints

For my part I will now be seeking more information regarding the powers of the Commissioner. I will ascertain whether they truly lack power or simply choose not to use it. You can rest assured that I will share my findings with you.

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