Ontario is proposing a series of reforms designed to put credit unions on a stronger competitive footing by bolstering deposit insurance coverage, allowing them to own insurance brokerages, and revising their capital rules, among other changes.

The Ontario government said Friday it is prepared to act on 15 recommendations contained in a legislative review report that aims to make the credit union sector more competitive and to bring the sector’s legislative regime in line with international best practices.

The report’s recommendations include:

> raising the deposit insurance coverage limit to $250,000 from $100,000 for both basic deposits and registered accounts, such as RRSPs;

> allowing credit unions to wholly own wider range of subsidiary businesses, such as insurance brokerages; and

> allowing Ontario credit unions to enter loan syndicates with credit unions in other provinces.

The report also recommends closely aligning consumer protections with the rules for federally-regulated banks, and revising capital rules to accord with international standards, among other proposed changes.

“Credit unions and caisses populaires provide valuable services that benefit their members, help grow the economy and create jobs. Implementing these recommendations would foster a more efficient and effective regulatory framework that better protects consumers and investors while improving the competitiveness of Ontario’s financial services sector,” says Ontario’s finance minister, Charles Sousa, in a statement.

The report was prepared by Laura Albanese, Parliamentary assistant to Sousa, following consultations across the province to seek public input on ideas for strengthening the sector.

“Throughout the consultations I heard how credit unions and caisses populaires play a pivotal role in their communities. Many support small businesses and entrepreneurs that may not otherwise have qualified for credit with other financial institutions. Many are the sole financial institution in rural, remote and inner-city communities. These recommendations can help credit unions and caisses populaires better serve these communities in the years ahead,” Albanese adds.

The proposed reforms are being applauded by the credit union sector. Central 1 Credit Union, the industry trade association and liquidity provider for credit unions in Ontario and British Columbia, says the proposals will benefit the industry. “The advances announced by the Finance minister will help Ontario credit unions attract more deposits, which we will turn into loans and mortgages to support small businesses and homeowners in our communities,” says Rick Hoevenaars, chairman of Central 1, in a statement.

Central 1 notes that the proposed changes to deposit insurance, and to the ownership restrictions, will bring Ontario into line with other provinces. “We look forward to working with the province to strengthen consumer protection regulations and to developing a new legislative framework that will allow us to succeed in the rapidly changing financial services business,” Hoevenaars adds.