for directors ; • potential conflict between two regulators ; • non - recognition of the evolution of credit union services beyond “ collecting people ’ s money and loans ” ; and • regime of criminalizing violations in the credit union bill that will hamper volunteerism in the movement i would like to address each concern in order to dispel, as far as practicable, any lingering fears. first, in respect of the restricted term limits for directors, i am pleased to announce that the minister of finance has agreed to extend the transition period from eighteen months to three years of the act coming into effect, so as not to cause undue disruption in the governance structure for the credit union sector. in a limited impact study, the central bank found that the boards of many of the larger credit unions have directors who would be in excess of the initially proposed term limits, and that compliance could pose severe disruption to the functioning of boards. second, in respect of the potential conflict between two regulators it is important to make a distinction between the regulatory role of the commissioner of cooperatives and that of the central bank. the commissioner will continue to look after registration, membership, education and training and development of credit unions. the central bank will be the prudential regulator with specific emphasis on safety and soundness of credit unions. there is little, if any, potential conflict of interest. as i indicated earlier, the commissioner and the central bank have worked very closely on the draft credit union bill and on amendments to the cooperative societies act to make sure that there is no overlap or duplication between these two pieces of legislation. we intend to continue working very closely together in regulation of the credit union sector, each focusing on its regulatory remit and area of competence. third, over the past few years, credit unions have, with the approval of the commissioner for cooperatives, ventured into non - financial services. these include travel agency services, resorts, gym facilities, daycare services, retail outlets and real estate development. we recognize that these non - core activities provide a supplementary source of earnings for credit unions and provide additional services to the credit union membership. however, these non - core activities represent a potential drain on the limited managerial capacity and expertise of many credit unions. moreover, these non - financial activities pose risks that are outside the supervisory responsibility of the central bank. as a consequence, the draft credit union bill allows credit unions to provide these non - financial services subject to certain limits on revenues and assets. these limits

seek to ensure that financial intermediation remains the core business of credit unions and that credit bis central bankers ’ speeches unions can minimize balance sheet risks arising from non - financial activities. in fact, woccu recommends “ the sum of non - financial investments not exceeding 5 percent of total assets ”. in the event non - financial services grow beyond the proposed limits, the members of the credit union must direct the board to establish a new cooperative, singly or in conjunction with other credit unions, to continue provision of these services. i wish to emphasize that there is no prohibition in the proposed legislation against the credit union and the new cooperative having the same governance structure and composition, an allowance that was requested by the sector. finally, the draft credit union bill makes most violations of the act or failure to comply with a direction issued by the bank, a criminal offence, for the credit union and the officer or director. ladies and gentlemen, i wish to advise that, in practice, the inspector of financial institutions will first call on the credit union and the officers to fix a problem, by letter of advice, recommendation or compliance direction. in giving a direction, the inspector follows due process of the law by giving the credit union time to make representation of the cause of the violation and to submit a plan for correction. i also wish to advise that the central bank will not exercise the option to bring the matter before the court where the credit union opts for the payment of an administrative fine. as such, even though the provision for criminal charges is in the law, it will be used only as a very last resort when all else has failed. conclusion ladies and gentlemen, the proposed credit union legislation is an important step towards placing the credit union movement in a position of greater strength, safety and soundness. as we transition to a more robust regulatory regime, the central bank is using the time before the passage of new legislation to analyze the audited financial statements of credit unions that have responded to our request for copies of their statements. over the last year, we have received statements from about 35 credit unions. we will be renewing our request shortly for more credit unions to send us their most recent audited financial statements. the central bank has also been encouraging credit unions to assess the impact of the proposed legislation on their operations and to share such results and any concerns with the bank. we have had some response from the larger credit unions on the terms of their directors and some smaller credit unions who are members of