Overcome Compliance Fatigue

Four steps to deal with the regulatory blitz.

September 15, 2010

I recently spent two days teaching at a CUNA Regulatory Compliance School.

I have taught classes on various topics for many years. The attendees are bright, eager, knowledgeable—and suffering from fatigue. Not the fatigue that affects a person’s body, but the fatigue that affects a person’s mind.

I remember such fatigue well. I associate it with studying for exams when I was in law school. What were those exceptions to the Hearsay Rule?

The root of this fatigue should be obvious. These people are on the front line of understanding and implementing the regulatory changes coming from a variety of sources.

Over the past two years, there have been major changes in consumer compliance related to almost all aspects of a credit union’s operations. The complexity of the changes and the short time required to implement these changes have added to the fatigue.

The relative newness of many credit union staff responsible for regulatory compliance in their positions enhances the challenge. At the sessions I taught, some attendees had been in their positions only a couple of weeks.

In fact, one attendee’s first day on the job was at the compliance conference. Clearly, there are people in credit unions with compliance responsibilities who are relatively inexperienced in their jobs.

Credit union staff, while always striving for regulatory compliance, may not have had the visibility or voice they needed in the credit union. There may not have been someone responsible for overall regulatory compliance, or that person may not have had the position in the credit union or the organizational voice to influence credit union practice and focus.

Certainly, some of the problems mentioned are being addressed by executive management at many credit unions. Nevertheless, I have four suggestions to better meet your regulatory compliance needs:

1. Make someone responsible for overall compliance duties

In many credit unions, individual areas of the organization have compliance duties.

For example, the loan department is responsible for Truth-in-Lending compliance and the information technology area is responsible for website compliance. This leads to different and, likely, inconsistent compliance.

One person who oversees the credit union’s compliance duties can bring focus and consistency. This doesn’t mean that person does all the compliance work. It means compliance has a higher level of visibility and importance in the organization.

2. Give that person a seat at the leadership table

Your compliance leader needs to have the skills and expertise to oversee compliance. This is no place to skimp on compensation, skills, and abilities to influence your credit union’s compliance.

This person should report to an executive, be on the senior leadership team, or even report directly to the board. They shouldn’t fear being ignored by senior management.

3. Take compliance duties seriously

While I’m not suggesting credit unions haven’t done this, taking these duties seriously requires focusing on your compliance needs.

You must spend both time and money on compliance. While hiring a person to be responsible is a first step, you also need to hire staff to support the compliance leader, if necessary, and spend time and money teaching other staff about their compliance duties.

Cheap? No. Necessary? Yes.

4. Be prepared for more to come

The regulatory blitz is far from finished. Prepare the organization for more changes.

This means working with outside vendors to ensure they carry out changes you rely on them to provide. And it means a constant vigilance and testing of your compliance success.

Your members trust you. Complying with all the requirements being thrown your way is another opportunity to show members you deserve their trust. Structure yourself to not let them down.

BILL KLEWIN is associate general counsel at CUNA Mutual Group, Madison, Wis. Contact him at 608-231-7009.