SACRAMENTO-A recent advisory by the California Department of Financial Institutions-prohibiting CUs in the state from using phrases like "anyone can join" in their advertising-has come as a surprise to many people, including the state league.
The DFI informed credit unions via individual letters and a bulletin announcement to all licensees that statements such as "everyone can join" or "all individuals can join" constitute "impermissible advertising." In its April bulletin, the DFI stated that "Advertisements that display this message violate the Commissioner's regulation concerning common-bond requirements for field of membership."
The state's regulatory code requires that members have a common bond other than just the need to obtain financial services.
While the DFI's move could impact the way the CUs in the Golden State-particularly community chartered CUs-promote themselves, the California and Nevada CU League is not recommending any specific actions be taken, and is allowing individual credit unions to determine how they choose to market themselves.
'Hard to Measure'
"To be honest, I'm not sure how many credit unions in California were even marketing that way," said Bob Arnould, senior vice president of advocacy for the league. "It's really hard to measure what the impact will be or how many people will need to alter their marketing campaigns."
The league did not have any notice that the DFI would issue the ruling, nor were there any discussions leading up to the memo from the regulator, said Arnould. He pointed out that the notice from the DFI is not a new regulation, but an advisory or memo.
As to what prompted the notice, Arnould speculated that "someone probably noticed an advertisement of something and called it to the attention of the Department of Financial Institutions that issued a ruling. That's the way these things normally come to pass."
The California and Nevada Leagues does not currently have plans to fight the ruling. Rather, said Arnould, it plans to serve as an intermediary between the DFI and credit unions in order to create an ongoing dialogue that eventually leads to some sort of clarification.
Should that prove unsuccessful, "the other route is always if we believe that the department thinks that this is locked in stone as far as they're concerned, then we always have the legislative venue to facilitate change if we decide to go that route," said Arnould.
No Legislative Fix Sought
Arnould said that legislative action-if it comes to that-would not be pursued until all other avenues have been exhausted.
"We'll also have conversations with our members to gauge their interest and whether or not they think it has a significant impact. If they would like us to pursue a legislative remedy ... we can always do that."
For now, the league has not heard any response directly from its member credit unions, but Arnould said that is not surprising. Individual CUs may have responded to the DFI, which the league would not be privy to, but Arnould also speculated that a comparatively small number of credit unions may currently be impacted by the ruling.
"It's a frustration at the moment that I hope we can resolve through future conversation and dialogue with the department," he said. "Certainly community institutions whose doors are open to everyone who lives in that area or worships in that area should be able to have broad-based advertising. The department sees that differently. I think we need an ongoing dialogue."
