The verdict arising out of the showdown between the $600 million Vermont State Employees Credit Union and its state regulator over use of the word “bank” in advertising was reached Oct. 5, and it leans in the credit union's favor.
According to a joint release from the two parties, the Montpelier-based credit union cannot 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.
That means VSECU's tag line, “Redefining Banking,” can remain.
“This is not a matter of who won or lost a dispute,” said VSECU CEO Steve Post, “but an example of the state's regulators and industry working together to solve a problem.”
A bulletin posted on the state's Department of Financial Regulation website said effective Nov. 15, state chartered credit unions may not use the work bank to describe itself in marketing or advertising materials. The bulletin specifically said that includes a credit union referring to itself as a “banking cooperative,” as VSECU did.
DFR Commissioner Steve Kimbell said VSECU's request for a hearing on the regulator's enforcement of the statute “teed up a matter that's been in discussion for a number of years.”
“I want to thank the VSECU for its help in finding a way to reasonably apply a decades-old statute in a rapidly changing environment for financial services,” he said.
The issue was first raised in March when the Vermont Bankers Association complained about the credit union's use of the word banking in its advertising. That led to a June 18 cease-and-desist order issued by the DFR, commanding VSECU to stop using the words “banking” and “bank” in all advertising, marketing and communications copy.
The flap dusted off an old debate in the credit union industry over what, if any, alternate verbs or adjectives should replace the commonly used “banking”. –
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