Credit unions and building societies keep status quo

By PAULA OLIVER

A stoush over the right to use the word "bank" in an advertising slogan has ended happily for credit unions and building societies.

The organisations have secured the right to use the words "bank", "banker" and "banking" in trademarked advertising literature - even though they are not registered banks.

They still cannot call themselves banks.

Historically, credit unions and building societies had been allowed to use the words - as with the PSIS' "Simply Banking" slogan - but that right was threatened by the draft Reserve Bank of New Zealand Amendment Bill.

The bill proposed to extend restrictions on the use of the words so that credit unions and building societies would be prohibited from using them in trademarked slogans.

Many institutions had legally adopted slogans using the words for decades, but the Reserve Bank expressed concern about bogus operators masquerading as banks.

When the bill reached the finance and expenditure select committee last year several non-registered banking interest groups made submissions to fight the proposed restrictions.

Yesterday the committee reported back to Parliament recommending that the bill be amended - and that the right to use the words be retained as long as a disclaimer was added.

"We're very pleased," Justin Kerr, executive director of the Financial Services Federation, said. "If that's the business you're in, and you're in that business lawfully and you've been in it for 150 years in some cases, then to deny you the right to make reference to that in advertising seems insane."

Finance and expenditure committee chairman Clayton Cosgrove said the issue caused much debate among members, but it became clear that if the bill had continued down a tight, restrictive track, it would have affected decades-old reputable organisations.

"There are some less-than-reputable small-time organisations which might attempt to portray themselves as a bank. But on the other hand there are reputable organisations. It would have been very difficult to say to the building society that provides banking services, 'you can't use the word banking'."

He said the Reserve Bank was comfortable with a disclaimer stating that the organisations were not registered banks.