Revise the BC Credit Union Act to Reclaim Member Democracy

British Columbia's Credit Union Incorporation Act gets reviewed every 10 years, along with the Financial Institutions Act. That time has come, so the review process was launched on June 2, 2015.

It's an important opportunity to improve credit union governance. On this blog I have advocated for reviving democratic member control, to reduce the risks and costs of self-serving behaviour by insiders -- credit union boards and their payees (senior staff, consultants etc) -- with Coast Capital and Vancity as specific examples.

So I've submitted this comment letter on the legislative review. My main recommendation is to require each credit union to host a year-round online member forum to facilitate member sharing of information -- mainly to reduce board control of voter info during director elections. See also this comment letter by Bruce Batchelor, who advocates a wider range of democratic reforms.

As I highlighted in my similar comment letter to FICOM in 2013:

It is natural for directors and their payees to say: "To improve governance, we should give more power to directors." But instead, we should strengthen our democratic checks and balances. Self-serving behaviour is natural for humans, as it is for foxes, so I mean no offence to either when I say: Please don't let the foxes design the hen house.

Fortunately, this time the deputy minister has warned that they "may" publish comment submissions on the Ministry of Finance website. That would be a great way of exposing insiders' recommendations to the sunlight of public scrutiny.

Watch out for comments that advocate weakening credit union members' right to submit resolutions to a vote. There's a striking contrast between the BC Credit Union Act (Section 77) and the BC Co-op Act. The CU Act guarantees that with 300 member signatures, a resolution must be submitted to a vote of all members even if the board opposes it. The Co-op Act has no such guarantee.

Then contrast what has happened with members' resolutions at Coast Capital CU versus at Mountain Equipment Co-op (MEC). When Coast Capital members found out that their board had raised its own pay to more than double the Vancity CU board's pay, they put a resolution on the ballot and passed it by a 79% majority, against the board's advice to vote no. At MEC however, the board persuaded members to approve a rules change "modernization" that included (if you click through to read the details) letting the board reject any member resolution for any reason. The existing CU Act prevents boards from pulling that one.

Who I'm voting for in Vancity Credit Union election

Vancity Credit Union is having its annual election for board of directors. 3 seats are to be filled.

I'm voting for:

• Lisa Barrett
• Man-kit Kwan
• Vittoria DeMichina

Reasons:

• I haven't taken the time research the candidates in detail this year. If you know of any useful online reviews, please let me know.
• I avoid the recommended candidates because recommendations entrench the controlling clique, as explained in this earlier post.
• I have worked with Lisa Barrett on democratic reform, and think highly of her -- an easy first choice.
• I like Man-kit Kwan's straightforward emphasis on the community of members as owners.
• I like Vittoria DeMichina's personal history of pulling herself up by hard work.

Other info:

New independent website -- Vancity2015 Collaborative Democracy Wiki -- for sharing info on election candidates. Looks promising but still evolving towards being useful and convenient.

Vote by April 24 on Vancity website

Will #FICOMBC support @Vancity Credit Union board entrenchment? #democracy

Today I submitted this letter to the B.C. Financial Institutions Commission (FICOM), with my comments on their draft Governance Guideline for Credit Unions. Main points:

Accountability requires competition in board elections.
=> So boards should not be able to disqualify competitors based on subjective assessments.

Lack of accountability opens the door to corruption.
=> Only competitive elections can prevent favouritism in the use of members' funds.

Board control of information can bias elections.
=> Boards should not be allowed to put their recommendations on board election ballots.
=> Without that, Vancity members would have elected Lisa Barrett instead of Allen Garr.

Please don't let the foxes design the hen house.
=> The public interest should take precedence over lobbying by credit union insiders.

Will next week's B.C. election have any effect on FICOM's final Governance Guideline? Just asking...

Stand up for member #democracy: attend AGMs @MEC @Coast_Capital @Vancity

You can help reclaim member democracy by attending these upcoming Annual General Meetings:

Mountain Equipment Co-op (MEC):

Thursday, April 25, 2013
Doors open at 5:30pm
Meeting at 6:00pm
Roundhouse Community Arts & Recreation Centre
181 Roundhouse Mews, Vancouver
Please bring your MEC membership card or 2 pieces of ID

Coast Capital Savings Credit Union:

Tuesday, April 30, 2013
Registration and light refreshments from 4:30pm to 5pm
Meeting begins at 5pm
Executive Airport Plaza Hotel & Conference Centre
7311 Westminster Highway, Richmond, BC

Vancity Credit Union:

Tuesday, May 7, 2013
Registration at 6pm
Meeting at 7pm
Italian Cultural Centre, 3075 Slocan Street, Vancouver

(Vancity director election voting ends April 26. Here's why I'm voting for Williams, Barrett & Yaron.)

Reclaiming member democracy in co-ops and credit unions can be a first step toward making our elected leaders accountable to voters in corporations and democracies too -- see recent Vancouver Observer article "We want out co-ops back."

Oppose biased election ballot @Vancity - vote for Williams, Barrett, Yaron

A dominant majority of the Vancity board are using their control of information flowing to Vancity members, to tighten their grip on power over the credit union. Taking advantage of voters who are too busy to search for other info sources, the controlling group ensures that their recommendations are the only info conveniently available to members. I have documented this in a series of posts since April 2012 -- see votermedia.blogspot.ca/search/label/Vancity

Notably this year, one of the board's "recommended" candidates -- Bob Williams -- is not a member of the controlling majority (details in this report, from page 8). So I plan to vote for him. Challengers to the dominant group can help improve democratic competition and thus accountability to members.

I also plan to vote for Lisa Barrett and Gil Yaron, for the same pro-democracy reasons why I voted for them last year.

Vancity members can vote by Friday April 26, via mail or online.

Co-op #democracy reform movement growing @MEC @Coast_Capital @Vancity

Co-op members are waking up to reclaim their democratic rights.

Mountain Equipment Co-op:

Over 400 500 members of MEC have now signed an open letter "The C is for Cooperative, Not Corporation", protesting the MEC board's misleading labelling of a resolution that would transfer control of director nominations and member resolutions to the board. Members can vote on it until March 28, at mec.ca/election. I recently posted this analysis with voting recommendations -- please vote NO on the board's Resolution #1.

Coast Capital:

In a similar push-back, 438 members of Coast Capital Savings Credit Union (a financial co-op) have signed a petition demanding a vote to reverse a 2007 rule change that allowed their directors to decide their own pay, which has grown rapidly since then -- see the member-organized website Coast Capital Compensation Watch. Members can vote on the resolution from now through April 16, on paper ballots by mail or online at www.coastcapitalsavings.com > Log in > Account Services > Online Voting. (Please vote YES.)

Technology Credit Union:

Last year, the board of California's Tech CU proposed converting it into a mutual savings bank, a move that has been criticized (e.g. here) as enriching directors at members' expense. Fortunately, a campaign to alert members to the downside resulted in their defeating the proposal by a 77% vote.

Vancity Credit Union:

In April 2012, the Vancity board of directors elections were criticized for being undemocratic -- see especially the article's comments. Although other candidates can run for election, the board's recommended candidates are listed first on the ballot, in bold, with the word "recommended" -- my analysis here.

Vancity's 2013 board election is next month.

We Want Our Co-ops Back!:

Last year I wrote a report proposing reforms for these democratic deficits, and emailed it to the boards of MEC and Vancity. But judging from our resulting correspondence, they seem unwilling to restore accountability to members.

So more members are getting concerned about the trend, and seeking to reverse it. Last week I published an article in the Vancouver Observer, citing the decline in accountability of elected leaders as a major cause of the 2008 financial crisis. Co-ops can become the starting point for a democratic reform movement that can eventually empower us to also reclaim our corporations and our governments.

We are organizing -- please email me (mark[at]votermedia.org) to join us in re-establishing Co-op Principle #2 -- Democratic Member Control:

"Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership."

Published today in Vancouver Observer: We want our co-ops back @MEC @Coast_Capital

Today (2013-03-18) the Vancouver Observer news website published my opinion piece "We want our co-ops back".

It describes how the boards of Mountain Equipment Co-op and Coast Capital Savings have been changing the rules in ways that shift power from members to boards. This undermines the accountability of elected leaders to voters -- the same trend that caused our 2008 financial crisis.

But we can reverse the trend -- see how in the Vancouver Observer article.

[BTW the above linked article is a 2-page overview, partly based on my 24-page in-depth report with the same title but capitalized: "We Want Our Co-ops Back". Sorry for any confusion but I love that title!]

@MEC @Vancity #CIRA boards unwilling to restore accountability to members

Last year, I studied the trend toward violating the second fundamental principle of co-operatives -- democratic member control -- as co-ops become large. As examples, I focused on three organizations: Mountain Equipment Co-op (MEC), Vancity Credit Union, and the Canadian Internet Registration Authority. (CIRA, which manages the .ca domain, is not formally a co-op but faces similar issues of accountability.)

I wrote a detailed exposé of how these organizations' boards have been changing the rules in ways that shift power to themselves by reducing their accountability to members, while maintaining a facade of democracy -- see We Want Our Co-ops Back at votermedia.org/publications. Last September I announced the first draft on this blog and on Twitter, and emailed it to all three boards, inviting feedback. Here I'll report how they have responded so far.

To make it easier for them to give at least a partial response in the near term, in December I suggested that they focus on just two practical reform questions:

1. Do you plan to create a year-round online member forum?
2. Do you plan to create a competition for informing members, in which members vote to allocate award funds?
For both these questions: If so, when? If not, why not?

Mountain Equipment Co-op (MEC):

We Want Our Co-ops Back @MEC @Vancity #CIRA

Today I released the first draft of my paper We Want Our Co-ops Back, along with a spreadsheet Co-op Democracy Scorecard. From the paper:

We can reform all our large voter organizations, including democracies and corporations, by starting with reforming our co-ops (including financial co-ops such as credit unions). Most large institutions lack effective democratic control by voters. Even though citizens of democracies can vote, corporate shareowners can vote, and co-op members can vote, those voting rights are ineffective if voters lack the information, insight and nomination rights necessary to elect the best leaders. This paper outlines how we can better implement the fundamental co-op principle of democratic member control, even when co-ops grow very large. Later we can apply these ideas to our democracies and corporations.

This paper proposes rules to improve the democratic accountability of co-op leaders to members, organized in nine topic sections. To contrast these proposals with existing rules, I cite examples from three Canadian organizations where I am a member: Mountain Equipment Co-op (MEC), Vancity Credit Union, and the Canadian Internet Registration Authority (CIRA).

I welcome your comments!

@Vancity credit union election results: biased by info control

Insiders on the Vancity board have successfully used their control of information flowing to Vancity members, to tighten their grip on power over the credit union.

The board-appointed nomination committee recommended five director candidates, who competed in the election with eight other members running independently. Not only were the chosen five listed first on the ballot, but their names were in bold face, with the word "recommended".

Making it even harder for challengers to distinguish themselves, Vancity election rules severely restrict other information from reaching voters. Candidates are prohibited from saying who has endorsed them, from criticizing Vancity policies, and from saying what policies they would advocate if elected. I quoted the specific rules in this earlier post.

Sure enough, the five anointed candidates finished in the top five spots -- see election results here.

Members who took the time to understand what is happening have been speaking out against this slide toward oligarchy. Some of us spoke from the floor at the AGM yesterday. Others have been commenting online -- e.g. see these Georgia Straight links: April 12 and May 4.

But unfortunately, most Vancity voters are busy people who do not take the time to investigate beyond the information most readily available. So information control can sway the majority of votes, and effective member democracy will not kick in unless some spectacular crisis gets everyone's attention.

The Vancity board claims that members are more satisfied with the new voter information system. This claim is based on responses to surveys administered under board supervision. As any pollster knows, survey results too can be biased by how they are worded and what information the respondents have.

Fortunately however, the board seems to be listening to member complaints, and will hopefully be willing to return Vancity to real democratic member control, living up to the fundamental co-op principles.

I think the best way forward is an open, information-rich election system, as I described earlier. As a first step, at the AGM I suggested that we should have an open online member forum on the Vancity website.

I'll write more on this going forward. Meanwhile, your comments are welcomed!

@Vancity credit union election: Links to news & blogs @CarlitoPablo @BillTieleman @SunCivicLee @DonCayo

Voting ends today in Vancity's director election. Here are links to election coverage -- endorsements of candidates, and critiques of the voter information process (recommendations, gag rules etc). For priority reading I'd suggest the 2012-04-12 straight.com piece (& comments!) and my 2012-04-15 blog post:

2012-03:
www.nwdlc.ca/NWDLCNEWS%26EVENTS/vancity2012endorsed.html
NWDLC endorsed Yaron, O'Brien, McDade.

2012-04-02:
salmonwarriors.blogspot.ca/2012/04/gregory-mcdade-activist-board-makes.html
Ivan Doumenc interviewed & endorsed Greg McDade.

2012-04-04:
www.bcgeu.ca/BCGEU_endorsement_Vancity_2012
BCGEU endorsed McDade, O'Brien, Yaron

2012-04-12:
straight.com/article-657446/vancouver/vancity-elections-criticized
Wilson Parasiuk criticized voter info process with recommendations on ballot. Many interesting comments.

2012-04-14:
www.facebook.com/permalink.php?story_fbid=3629118977326&id=1554656883
Kim Griffith (former director) endorsed Holm & Barrett; criticized voter info process with recommendations on ballot.

2012-04-15:
votermedia.blogspot.ca/2012/04/vancity-credit-union-election-who-i.html
I endorsed Barrett, Yaron, Holm; criticized voter info process with recommendations on ballot & restricted speech; proposed reforms.

2012-04-17:
billtieleman.blogspot.ca/2012/04/vancity-credit-union-elections-my.html
Bill Tieleman endorsed Yaron, O'Brien, McDade. Some interesting comments.

2012-04-18:
blogs.vancouversun.com/2012/04/18/why-is-vancity-credit-union-recommending-who-to-vote-for-in-board-elections/
Jeff Lee criticized voter info process with recommendations on ballot.

2012-04-19:
www.straight.com/article-663291/vancouver/vancity-boards-intervention-defended-and-condemned
Comments in response to 2012-04-12 straight.com article.

2012-04-20:
www.straight.com/article-666036/vancouver/bob-williams-obliged-keep-mum-vancity-election-practices
Vancity gag rules prevent director Bob Williams from expressing his opinions.

2012-04-24:
www.vancouversun.com/opinion/Vancity+muzzles+candidates+board/6508213/story.html
Don Cayo criticized Vancity's gag rules that prevent candidates from campaigning on policy issues.

@Vancity credit union election: Who I plan to vote for & why

Summary:

I plan to vote for LISA BARRETT, GIL YARON and WENDY HOLM.

My main reason: strengthening the connection between our board and us Vancity members. I am concerned that our system of election rules shifts power from us members to whatever group currently dominates on the board. We should change those rules to make the board more accountable to members. I think Lisa, Gil and Wendy are the most likely to help us do that, as well as being highly qualified candidates.

[BTW I hope to learn more in the next week or so, and may yet change my voting plans & update this post.]