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COK, under BOJ pressure, withdraws dual currency credit card
Patrick Foster, Business Observer writer
Wednesday, May 16, 2007
Hickey. credit unions should be given the opportunity to compete like other financial institutions
City of Kingston Credit Union (COK) has withdrawn its offer of a dual currency credit card to members, yielding to pressure from the Bank of Jamaica (BOJ), which has instructed that the credit union has no authority to deal in foreign exchange.
"We have accepted that we are not authorised so to do," Dennis Hickey, COK's deputy general manager, marketing and business development, told the Business Observer.
Hickey, however, said he believed that credit unions should be given the opportunity to compete like other financial institutions.
Up to press time yesterday, efforts to get a statement from BOJ were unsuccessful.
Financial analysts, however, argued that credit unions are not currently under the Banking Act and new regulations that give the central bank authority to govern the operations of credit unions have not yet been passed in Parliament.
Last month, the Business Observer reported that COK planned to issue dual currency credit cards to its members in association with RBTT commercial bank.
COK would assess the credit rating of its members and take the risks while RBTT, with the relevant administrative framework in place, would process and issue the cards.
The new cards, COK said, would offer a monthly US dollar interest rate of 1.42 per cent, the lowest offered on the market.
"RBTT had no input in the rates charged by COK. the credit union does not have a clearing house, but it is totally our product," Hickey explained then.
But the island's leading credit union was forced to take an about-turn a week later when the BOJ intervened and instructed that the card offer be rescinded as COK was not licensed to deal in foreign exchange.
In a notice published in the Observer of Saturday, May 5, COK retracted its offer of the dual currency credit card, saying that the credit union was not authorised under the Bank of Jamaica Act to issue credit facilities in foreign currency.
"As such, plans for the credit union to offer a dual currency card have been withdrawn and initial arrangements cancelled," the COK notice stated.
It added that through the alliance with RBTT "via affinity arrangement", members could still access the dual currency card offered by the commercial bank. COK, it said, would continue to offer local currency cards to its members.
Local currency cards would have been phased out had the credit union been able to introduce dual currency cards.
COK is the island's leading credit union with an asset base of over $5.5 billion and more than 190,000 members.
The credit union recently celebrated its 40th anniversary with the opening of an $80-million building at its Cross Roads head office complex and is planning a relocation of its Half-Way-Tree branch to the new Winchester Park on Hope Road.
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