Vermont Regulator, CU Reach Agreement on CUs' Use of Term 'Bank'

Posted by Marissa Anema Tuesday, October 09, 2012 10:29:00 AM

 

MONTPELIER, Vt. – After drawing national attention to the issue of a credit union using the term “bank” in its advertising, the Vermont State Employees CU (VSECU) and the State Department of Financial Regulation (DFR) announced Friday they have reached an agreement on when VSECU and other state-chartered credit unions can use the words "bank," "banking" and similar words in marketing their services. Under the agreement the credit union will not describe itself as a bank but may use the word “banking” and similar words when advertising its services as long as it discloses that it is a credit union.

This summer, the credit union received a notice of DFR's intent to issue a cease-and-desist order regarding VSECU's marketing and the credit union requested an administrative hearing. “This request for a hearing teed up a matter that’s been in discussion for a number of years;” said Commissioner Kimbell, “it gave us a context in which to reach agreement on how to apply the statute.”

Vermont state statute prohibits credit unions from using such words unless the DFR Commissioner finds the use would not mislead or confuse consumers as to the nature of the institution, said VSECU and DFR in a joint press release.

Under the agreement, the credit union will not describe itself as a bank but may use the word "banking" and similar words when advertising its services as long as it discloses that it is a credit union. The disclosure that VSECU is a credit union must be "clear and conspicuous so that reasonable consumers can read, see or hear and understand the information."

The two parties agreed to settle and withdraw any and all claims and actions, terminating the hearing process that had been underway.

Click here for a letter from VSECU CEO Steve Post on the matter.

Click here for the bank bulletin from DFR Commissioner Stephen Kimbell.

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