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G-20 invites WOCCU input on inclusion methods
MADISON, Wis. (5/4/10)--The World Council of Credit Unions (WOCCU) will provide input to a Group of 20 (G-20) subgroup to ensure credit unions are represented in G-20’s inclusion policies. Leaders from the G-20 nations would like to see the global poor receive greater access to financial services through safe and sound modes of service delivery administered worldwide, WOCCU said. WOCCU was invited to comment on the G-20’s proposal. At its 2009 Pittsburgh Summit, the G-20 appointed the Access Through Innovation sub-group of its Financial Inclusion Expert Group to examine and recommend new methods to provide the world’s poor with financial services. The subgroup’s co-chairs asked for WOCCU’s input on the draft Principles for Innovative Financial Inclusion, a plan that the organization’s members do not believe fully enables credit unions to effectively fulfill this mission, said Dave Grace, WOCCU vice president of association services. “After consulting with our members, we believe the draft principles don't go far enough to ensure that credit unions worldwide can access critical payment systems, card networks, central bank lending facilities and deposit insurance systems to offer innovative and inclusive products,” Grace said. “WOCCU’s work to expand access to financial services by providing reloadable debit cards, ATMs and mobile banking services to credit unions would be significantly streamlined if credit unions could access these core central banking services,” he added. In an April 28 letter to subgroup co-chairs Paul Flanagan, general manager of the Australian Treasury’s international finance division, and Luis Mansur, deputy head of Banco Central do Brasil's external debt and international relations department, Grace stressed several changes to the proposed nine principles. The principles focus on technology, education and responsible oversight as ways to increase consumer access to financial services. WOCCU’s recommendations better articulate the opportunity for credit unions to participate in providing the services, WOCCU said. In the letter, WOCCU recommends that principle two, which focuses on diversity of products, also contain this clarification to promote diversity of institutional types and credit union involvement (recommendation in Italics): “Implement policy approaches that provide incentives for sustainable financial access through various types of financial institutions, and usage of a broad range of services (savings, credit, payments and transfers, insurance).” WOCCU also advocates for the inclusion of a 10th principle, outlined as follows: Equality: Allow all prudentially supervised institutions to directly access payment systems, lender-of-last-resort facilities, deposit insurance and card networks, which will enable both banking and non-banking financial institutions to offer a broad set of services to the financially excluded. “The addition of this principle will ensure that non-banking financial institutions, which often are the primary providers of services to the financially excluded, can offer safe and sound services comparable to those offered by the banking sector,” the letter explained. “Today, one-third of credit unions globally have direct access to payment systems and less than half have access to deposit insurance systems. Without such access, innovations will be limited, costs will be higher and depositor security will be sub-optimal.” A WOCCU delegation put forward a similar agenda in meetings last month with the Financial Stability Board in Basel, Switzerland. The Access Through Innovation sub-group will present the final Principles for Innovative Financial Inclusion for consideration by the G-20 ministers of finance when they meet June 25-27 in Toronto.
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