Part I

Expect a ‘Wild Compliance Ride’ in 2013

Experts urge CUs to make compliance a top priority.

November 20, 2012

Credit unions can expect a “wild compliance ride” in 2013 and 2014, according to CUNA Mutual Group compliance experts who urged credit unions to renew their focus on compliance and upgrade compliance staff’s skills to navigate the demanding regulation road ahead.

Bill Klewin, director of regulatory compliance, and Lauren Calhoun, compliance manager, say regulatory compliance will be “extremely expensive” and require a sizeable amount of work in 2013.

They cite proposed mortgage rules, for example, that take up to 3,500 pages.

The compliance duo advises credit unions to:

Compliance typically gets the short end of the resources stick in organizations, Klewin and Calhoun say, as well as a lack of respect. The regulatory process can be piecemeal and uncoordinated because departments—operations, lending, and information technology, for instance—tend to tackle compliance tasks on their own without regard to the organization as a whole.

That makes a renewed outlook that focuses on behavioral changes essential, Klewin says. “Credit unions should embrace changes in regulation. In the past, compliance was thought of as paper disclosures. But now compliance is more behavioral, consisting of things you do and say to members. Changes have real meaning, both in process and procedures.”

The evolution of the compliance function requires changes in accountability as well as an upgrade in skills and respect for compliance, he says. As risk management is now viewed by regulators as needing a holistic approach, compliance should be viewed in a similar light by considering all departments and their inter-relationships.

“One person needs overall accountability,” says Klewin. “You need to upgrade skills and influence of the compliance function. There should be a regular review of compliance as well as the ability to think across the organization as regulations typically affect more than one department.”

Klewin and Calhoun addressed the CUNA Lending Council Conference in Miami. Tune in tomorrow for a report on the importance of taking a holistic approach to compliance.