My First Year: The Good, Bad, and Downright Ugly
Observations from an attorney navigating through her first year of CU compliance.
I grew up in a credit union family. Our local credit union was there for my family when it stumbled upon hard financial times in my youth, and it continues to be there for us today to help celebrate a joyous occasion—my upcoming February wedding!
To this day, my mom says, “I don’t know what I would do without our credit union.” To my family’s delight, I joined the credit union movement as an employee of CUNA Mutual Group just over a year ago.
My arrival at CUNA Mutual Group as a regulatory compliance manager coincided with an incredibly challenging time in the credit union industry. No, not the obvious economic meltdown or the housing crisis.
I’m referring to the changing regulatory landscape, the arrival of the new sheriff in town—the Consumer Financial Protection Bureau (CFPB)—and the issuance of more regulations than the industry has seen since its inception in the 1930s.
During my first year, it immediately became clear that the credit union industry is at a crossroads. Let me be frank: Everything is changing.
From mergers to regulations to social media and serving Generation Y, credit unions must adapt to the changing environment to stay alive and relevant. The way credit unions have done business for years is not how credit unions will do business in the years to come.
The only exception to this is the focus on members. Successful credit unions do not just provide financial services to members; they provide comfort and security.
My family has experienced this from the time we joined our local credit union, and I have seen it first hand during the last year. This is the Good.
Now, here’s the Bad. From a compliance standpoint, credit unions will no longer be able to ride the coattails of the industry’s reputation as “the good guys.”
Let me be blunt: If you are not focusing on compliance, dedicating money and staffing to its cause, and implementing a robust compliance training and implementation program, you are making a grave mistake.
You cannot ignore regulations or creatively skirt your way around them (yes, I have seen quite a bit of that, too).
The CFPB and the courts are incredibly proactive in this new environment, examiners will be going deeper into your lending and deposit portfolios, and there is no shortage of plaintiffs around the country just waiting for you to make a mistake (a la ATM signage).
Within a few short months at CUNA Mutual Group, I recognized that credit unions were not focusing enough energy on compliance. This remains true, and it needs to change.
Finally, I get to the Ugly. In 2012, more than 4,000 pages of rules, either proposed or final, were issued, thus far. And the Downright Ugly is that the volume of regulations that will be issued in 2013 and 2014 will put this year to shame.
The CFPB is just getting started. The mortgage industry will endure major reconstructive surgery in the coming years, there will be changes in consumer lending and deposit, and new areas of regulation will continue to pop up (the regulation of remittance transfers is just the precursor).
Credit unions need to prepare today.
I recognize the entire credit union industry is suffering from compliance fatigue. I can diagnose that as a juris doctor, right?
However, this challenging environment for the financial services industry presents an opportunity for the credit union movement to continue to differentiate itself from the rest of the financial services pack by serving its membership with the principles the credit union movement was founded upon: people helping people.
Implementing the seemingly constant flow of compliance changes while simultaneously growing membership and increasing loans and income isn’t easy. Yet, with a laser focus on members and the appropriate compliance resources, it can be done.
My family, along with millions of others, depends on it.