Get Ready for a Compliance Deluge

CUs will continue to experience a fast and furious regulatory environment.

November 9, 2011

The pace, complexity, and timing of today’s regulatory changes are unprecedented and will require credit unions to rethink how they do business, a CUNA Mutual Group compliance expert told attendees at the 17th Annual CUNA Lending Council Conference in New Orleans.

Bill Klewin, CUNA Mutual’s director of regulatory compliance, outlined an array of current and pending regulatory issues that will tax staff, consume resources, and possible hinder how credit unions serve members.

“The regulations, coupled with the effect of the new Consumer Financial Protection Bureau [CFPB], will impact all areas of a credit union’s operation, including debit and credit cards, home equity and consumer loans, tellers, [mortgage processing], HR compensation plans and auditing” and more, Klewin says.

Klewin says it’s not yet clear what approach the CFPB will take, but it appears the agency is data driven.

“They may take a disclosure or change in a rule and take it to the people affected to determine a course,” he says. “It’s a remarkably different approach, and the old way of doing disclosures may go right out the window. It may make sense but it would be very foreign to how credit unions and regulators are accustomed to operating.”

He encouraged credit unions to make use of comment periods, calling them a “meaningful opportunity to have influence as regulators do read the material. It’s an opportunity for your voice to be heard on proposed rules, so credit unions should exercise their democratic right and speak up.”

Now more than ever, credit unions won’t be able to just spend time on compliance—they’ll need to maintain a sharp focus on it, Klewin adds, stressing the importance of having someone in the credit union accountable for compliance issues.

“Your compliance person isn’t the most loved person in the organization,” he says, “so it’s important that they report at a certain level and not be subject to influence by business areas of the credit union.”

“You can build, buy, or rent for this important position,” Klewin says. “One, you can take someone from within your organization and give them the training and tools to be good at it, or you can go out and buy someone with a proven track record of compliance expertise. But that can be expensive.”

Another alternative is to outsource some of the work, such as documents business, he adds. “You can put it in the hands of a provider that’s been in the business and knows the regs. It can take a huge burden off your shoulders.

“The bottom line: We’re operating in a new world where you have to think of compliance organizationally because it will affect almost every aspect of your business. The pace of new regulations is daunting." challenging both credit unions and regulators.