Caution If You Bought or Are Thinking of Buying East Coast Credit Union GICs | Page 2 | GIC discussions | Discussion forum

First of all: hats off to GR for doing all of this heavy lifting, and then sharing it so others can learn what's going on.

At the very least, it looks like the matter will have to be resolved (eventually) one way or another:

1) either members who came through brokers are given a share; or,
2) the share that members who came through brokers were given is confirmed, and evidence is provided to members who ask for it (if not globally as a matter of policy going forward -- that's what CUs like Equity do, as the capital share is clearly shown on the GIC certificate that you get sent via your broker).

When will either of the above happens? Who knows. But now that it is out there -- again, thanks to GR -- I don't see how it ever goes away. Which is good!

What I think should happen here, is the CEO of ECCU actually demonstrate some leadership by coming to this forum and posting what is going on. I doubt that will happen, but it should.

Lastly, if it turns out that ECCU has been setting up 'member profiles' instead of 'member shares,' I would be surprised if there is any nefarious reason for this. I would imagine that it's just administratively simpler. Credit unions that use brokers do NOT want to deal with members who are brought in through that channel. Some of them will (to some extent) as a matter of courtesy. But part of what they are 'buying' from the broker is not having to provide any services.

Some brokers are very good at providing this service and being on the front line. Some are OK. And some are terrible, in that they don't offer any services. They are just a GIC vending machine, basically.

HermanH said
I think that, at this point, I will trust Kevin Rotenberg about getting insurance coverage for all GICs sold by him.

I will also pursue the matter directly with the CU, as I did with DUCA. Their deposit manager was surprised by my call, as he said that he has never been contacted by a broker-client before. He was happy enough to answer my questions and told me about the courtesy-shares filed on my behalf.

I will do the same with East Coast CU.  

Great -- even though I don't deal with East Coast at this time, the more people who contact them about this the better.

I also trust Kevin, and his reputation is unimpeachable (he's been in this game for something like 20 years). I can't imagine he would state something definitive like this without being absolutely certain, and knowing that he could provide or get evidence if required. I wouldn't be surprised if he has been in touch with East Coast (or vice versa) to accelerate the 'resolution' that they said was in the works.

In fact, now that Kevin does know this is an issue, I could see an argument that he would be allegedly derelict if he failed to disclose it to a client that was interested in making an investment at East Coast (I'm not saying the allegation would be upheld, but I could certainly imagine a messy, noisy argument about it).

It could even lead to brokers basically pulling East Coast 'off the board' until this gets fixed. I mean, I'm not a broker (and don't play one on TV), but I would definitely be pausing all business with East Coast until this is nailed down.

GR said
I hope that a few people here will contact East Coast Credit Union to determine if the information conveyed to me by an Assistant Manager about membership shares was accurate (or if Kevin is correct).

If they don't set up membership shares without cost to the GIC purchaser, as other credit unions do, they must be pressured to do so, to ensure deposit insurance coverage.

Please post your findings. If and when I receive a requested update from ECCU, I will post here.  

My belief is that this will end in a positive way. Either ECCU will fix what's broken, or their staff will be reminded of this obligation, and understand how to communicate it to members (and provide them with evidence as required or requested).

A member share at ECCU is only $5. And if they front it for broker-facilitated members, then they get it back in the end anyway.

My guess (and it's just a guess) is that they are setting up a member share -- I don't believe you can technically exist in a credit union's system unless you are a member, and I don't think you can exist as a member unless you have a member share.

However, broker-enabled members don't "see" their share because they don't have online banking. CUs generally don't like giving that out to members who come through brokers. It's not a legal thing...they just don't want to spent time (= money) on them. They expect the broker to do it as part of the deal.

For those who are interested, the CEO of East Coast is named Ken Shea, and his email address is ken.shea@creditu.ca. I will be sending him an email, because right now there is no way I would consider depositing funds there until this is fully cleared up. And the longer that takes to happen, the less likely I am do consider them even when they clear it up.

The source for the email is this publicly-available press release: https://www.newswire.ca/news-releases/east-coast-credit-union-wins-national-award-for-community-economic-development-860635725.html

I received an email response from both of them as well. My understanding from their CEO is they will be sending out an official statement in the next few days.

I think the work of GR here has been outstanding, and it was wonderful to see this process play out so quickly.

With this being said: I don't like the "miscommunication" justification. A miscommunication to me means: "we were doing it the right way all along, but someone conveyed it the wrong way."

But what appears to have been happening, is that they were not assigning a share to members who purchased through brokers, even though they should have been. There is no miscommunication there. They just had it wrong.

If anything, what they may refer to as a miscommunication is the fact that whoever GR talked (or emailed) with the first time was blatantly honest when, as far as East Coast is concerned, they should have either not answered the question or referred it to someone higher up the food chain who could figure out what was going on.

Again, way to go GR. Hopefully East Coast will never go under, but if that happens, then there will be members who purchased through brokers who will benefit -- and not in a minor way. Someone could have lost (or been extremely worried about losing for weeks or months) a life-changing amount of money.

savemoresaveoften said
So basically ECCU got it wrong all along and is rectifying the situation now that they know what they don’t know before. So much for being the largest CU in Scotia and blah blah.