MONTPELIER, Vt. – In a spat that could have ramifications across the country, state regulators ordered Vermont State Employees CU to stop using words such as “bank” and “banking” in its marketing, communications and advertising, telling the state’s second-largest credit union those words are reserved for banks only.
The $600-million credit union uses the slogan “Redefining Banking,” and on its website prominently offers “Secure Online Banking.” On that website Vermont State Employees has message from its board telling members it is being “Targeted In A Banking Battle.”
The unusual regulatory directive comes as growing numbers of credit unions are marketing themselves as alternatives to traditional banking.
Officials with Vermont State Employees CU have promised their members to fight the Department of Financial Regulations’ cease and desist order. “We’re prepared to follow this through to the end, regardless of how long it takes, to ensure that we can continue to tell our story using a vocabulary that is simple, honest and commonly understood,” said Steve Post, president of the credit union.
The credit union told members it intends to “fight this notice and vigorously defend” its right to freedom of speech.
VSECU said that over the past several months it has provided evidence to the state regulator that shows unusual regulatory action is misguided and will unfairly inhibit the growth of cooperative, not-for-profit banking for Vermonters. But the regulator has not changed its position and it is pressing forward, apparently because of continuing complaints from bankers.