By Alric Lindsay
The Cayman Islands Civil Service Association Cooperative Credit Union issued a statement on August 27, 2024, expressing concerns about a proposed $200,000 annual fee recommended by Minister Andre Ebanks through his ministry. The Credit Union said the fee “poses a significant threat to the foundational operating principles of the Credit Union” and the proposed amendments to the Cooperative Societies Act to implement the new fee is “unreasonable and unconscionable, and potentially unconstitutional.” Several MPs have also now chimed in, disagreeing with Minister Andre Ebanks’ proposal and noting that they were previously unaware of the proposal.
Background of the fee hike controversy
For those who may not be aware, the reasons behind the proposed fee increase are detailed in the consultation paper that was distributed by the Ministry of Financial Services.
According to the Ministry’s consultation paper, the new tax on the Credit Union is a response to the necessity for “enhanced revenue streams to achieve broader economic and budgetary objectives” as mentioned in the 2024-2025 Budget Policy Statement delivered by Premier Julianna O’Connor Connolly.
The consultation paper also highlighted that, in making the fee proposal, the Ministry of Financial Services had “comprehensively reviewed financial services fees” for various authorities and agencies, including the Credit Union.
The consultation paper explained further:
Importantly, the review identified certain fees that have not been increased in over 5, 10, 15 years or, in a number of instances, longer.
Whereas, despite the evolution and growth of regulated activities, a corresponding increase in staffing and other resources has not proportionately occurred.
The Ministry has therefore identified certain areas where new Fees are warranted given the resources required for regulatory oversight of those activities.
The Credit Union’s response
In response to the consultation paper, the Credit Union referred to the proposed $200,000 annual fee as “exorbitant.”
The Credit Union added, “These changes would dramatically increase the fees we are required to pay, forcing us to significantly alter our cooperative model that has successfully served our community for nearly five decades.”
The Credit Union further noted that the 10 day consultation period (with a response required by September 3, 2024) was “concerning” and was not in sync with their own rules which requires them to give Credit Union members “a minimum of 14 days (about 2 weeks) to call a special general meeting.”
The Credit Union expressed that if the proposed fee is implemented, it would have the following impacts on its members:
- Reduction in dividends
- Increased member fees
- Changes to interest rates
- Loan rebate adjustments
Members of the Credit Union’s board of directors and a former chairman, James Watler, also discussed their concerns on the For The Record Show with Orrett Connor this week.
Regarding the concerns raised, Mr Watler noted that there was “no prior communication” with the Credit Union.
He added that the “form and fashion” that this matter was executed “is the most despicable way of trying to speak to the Credit Union or any other entity in regards to what is being thought of.”
He continued:
Because maybe had they sit down, convene a meeting, sit down and explain what they were doing, where they were at and so forth, we would not have any need to be here now speaking to this, because one of the things that a government should do is communicate.
And right now this is not communicating. This is mandating. And we do not like, as citizens, we do not like things just thrown at us to say, well, you take it or you leave it.
Andre Ebanks’ fellow MPs unaware of fee hike
In addition to Mr Watler, MP McKeeva Bush called the talk show to say he was unaware of the $200,000 fee hike on the Credit Union.
Bush explained:
… a matter such as fees being increased is something that comes to caucus first before going out for any kind of public consultation. This has not happened in this case. I can tell you that it has no support in caucus.
He continued:
And I can tell you, tons of people have contacted me and left messages for me complaining about this intended action by, I guess it was the minister or his team, but it’s not well thought true at this point and we certainly cannot support it.
I am a member and I guess about 38 years, 38 to nearly 40 years of being a member of the credit union. And I certainly know the value of it.
Following Bush’s comments, Premier Julianna O’Connor-Connolly called the For The Record Show to explain her position.
She said:
Let me just say first and foremost I am a member of Credit Union to declare any perceived or direct interest but I’m not calling as a member. I am actually calling as the Premier.
I’m not calling to put my Deputy Premier underneath the bus, but truth is the matter is yet to go to Caucus or Cabinet.
She continued:
Based on my instructions I gave this morning, the majority if not 100% of the Caucus does not support this procedure that is taken and in fact, the content of the procedure.
So, I’m not bound by collective responsibility as it has not yet [come to the Cabinet]… and I don’t think it will because I set the agenda.
She concluded:
The Credit Union is much different from a commercial body.
There are perhaps some discussions that need to be held in other respects but certainly not taking from Peter to pay Paul.
What Credit Union Members should do now
Given the concerns raised, the Credit Union said it is “actively engaging with legal advisors, industry experts, to contest these changes.”
The Credit Union added that it wants members to voice their concerns and oppose the proposed changes by contacting their political representatives and expressing how the proposed legislative change will affect them personally.
Additionally, the Credit Union has made a voting link available on its website for members to vote against the proposed legislative change.
The link can be found below:
https://us16.list-manage.com/survey?u=6e6559ffcec4d3ee8a8779929&id=70afc45bd2&attribution=false
