NECU Cheque a First for Credit Unions

While it might look like any old big cheque, the $1000 cheque presented by New England Credit Union to Ronald McDonald House marks another milestone for the community banking institution.

Anyone who looks carefully will see that the cheque does not bear the name of any bank alongside that of NECU. The cheque also has a new BSB number, a unique identifier that legally denotes the cheque as one that has been issued by NECU.

While these changes may seem minor, they are the outcome of a longstanding debate (involving credit unions, banks and Government authorities) over whether or not credit union cheques should carry the same status as the well known ‘bank cheque’.

It is not only a first for NECU but for all Credit Unions in Australia. NECU’s breakthrough chalks up the end of a complex battle for independence and a departure from a long tradition in banking history.

That tradition, says NECU CEO Kevin Dupé, dates back hundreds of years to British law, which gave banks the sole entitlement to issue cheques. Credit Unions and other mutuals were required to use one of the four big banks as a Tier One clearing house. Those arrangements required the insertion of the relevant bank’s name on each cheque.

By the mid 1990s credit unions were on a par with banks in terms of regulations and tax status, but still had not shed this last remaining symbol of big bank authority.
Just this year NECU broke this old regulatory barrier and won the right to be granted its own BSB number, which in turn has now enabled NECU to issue its own cheques without reference to any bank.

“It is significant for us because it reduces our costs and breaks the 50-year-old stranglehold of the big banks,” Mr Dupé said. “NECU is the first credit union to make this breakthrough and it has been achieved as a result of compelling arguments put forward by our board and staff.
“It is also fitting that our first big cheque should go to Ronald McDonald House, a wonderful organisation that provides accommodation in Tamworth for seriously ill children and their families from throughout the New England North West region.”