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Savings debate highlights WOCCU Pacific Tech Congress
PORT MORESBY, Papua New Guinea (9/24/10)--Savings accessibility and other critical issues formed the focus of the World Council of Credit Unions’ (WOCCU) Pacific Credit Union Technical Congress, co-hosted by the Credit Union Foundation Australia (CUFA) and the Federation of Savings and Loan Societies of Papua New Guinea (FESALOS).
Click to view larger image From left, World Council of Credit Unions (WOCCU) Executive Vice President and Chief Operating Officer Brian Branch, Federation of Savings and Loan Societies Ltd. of Papua New Guinea (FESALOS) board Chair Michael Koisen and Credit Union Foundation Australia CEO Peter Mason met at WOCCU's Pacific Credit Union Technical Congress in Papua New Guinea last week. FESALOS became WOCCU's newest member in April.
Click to view larger image Alan Cameron, left, CEO of the Idaho Credit Union League and Federation of Savings and Loan Societies Ltd. of Papua New Guinea board Chair Michael Koisen discuss regulatory issues. The two organizations are paired in the World Council of Credit Unions’ International Partnerships Program. (Photos provided by the World Council of Credit Unions)
Eighty-four participants from Australia, the Federated States of Micronesia, Fiji, Papua New Guinea, Solomon Islands, Timor Leste, Tonga, Tuvalu, Vanuatu and the U.S. gathered last week in Port Moresby for the three-day event. Sessions ranged from the changing financial marketplace, to increasing scrutiny from regulators, to global trends in financial regulation. The topics also attracted local television news coverage. Credit unions in the South Pacific are responding to an increasing demand for savings products, but savings growth is hampered by legislation that caps the interest rates for credit union savings accounts to near 7%, while the inflation rate hovers near 10%. Banks have no restrictions on the savings account interest rates they can offer, causing credit unions difficulty competing for savings market share. Pacific credit unions also operate with a cap on loan interest rates at 1% per month and are working to adjust to greater regulatory scrutiny at their compliance with accounting standards, capital and liquidity requirements, and consumer protection standards, a situation that sounded familiar to conference participant Alan Cameron, president/CEO of the Idaho Credit Union League. “In Idaho, loan interest rates were once limited by state legislation,” said Cameron. “We had to show legislators that the interest rate controls prevented credit from flowing into Idaho and providing funding for local economic activity. When the limits were removed we had funding for more jobs and economic activity.” While credit unions in the South Pacific have not experienced the investment or delinquency losses that have affected other regions, they face increasing consumer pressure to demonstrate more professional management and internal governance. CUFA and WOCCU are working with the newly formed Oceanic Confederation of Credit Union Leagues to provide management certification training to credit union leaders and continuing education through the Pacific Congress. The two-year Manager Certification Program, held in conjunction with the congress each year, graduated 14 participants who completed their second year last year in Fiji. The program initiated a new group of 42 credit union leaders from Fiji, Papua New Guinea and Timor Leste. “Credit unions in the South Pacific are under tremendous pressure to update their model to keep consumer confidence, comply with regulations and compete with new technology,” said Brian Branch, WOCCU executive vice president and chief operating officer. “While the values of financial empowerment remain constant, the financial model, the products and the technology evolve.” The recently formed Global Women’s Leadership Network held a half-day Leadership Development Workshop preceding the congress for women credit union executives and board members interested in expanding their leadership capacity. Of the 23 congress participants, 18 women participated in a series of team-building exercises, group discussions and presentations that focused on strategic thinking, increasing self-confidence and improving public-speaking skills.
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