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Coping with a growing compliance burden
LAS VEGAS (7/14/10)--Every financial crisis in the past has led to more regulation, but “this one’s a doozy,” with 61 regulatory pronouncements made in 2009 and more expected in 2010, said Alan Cameron, president/CEO of the Idaho Credit Union League, and chairman of the Credit Union National Association’s (CUNA) Consumer Protection subcommittee.
At The 1 Credit Union Conference, a Monday breakout session on coping with the increasing burden of compliance told credit unions that 61 regulatory changes were promulgated during 2009. Speakers at the breakout were, from left, Alan Cameron, president/CEO of the Idaho Credit Union League and chairman of the Credit Union National Association’s (CUNA) Consumer Protection subcommittee; Donna Chardeen, director of compliance and fraud mitigation at SEFCU, Albany, N.Y., and Kathy Thompson, CUNA senior vice president for compliance and legislative analysis. (Photo provided by CUNA)
Cameron was one of three panelists who spoke about coping with a growing compliance burden in a breakout session Monday at The 1 Credit Union Conference in Las Vegas. Others were Donna Chardeen, director of compliance and fraud mitigation at SEFCU, Albany, N.Y., and Kathy Thompson, CUNA senior vice president for compliance and legislative analysis. Regulations help avoid crisis, help organizations follow the straight and narrow, protect consumers, help them shop for services and ensure fair competition, Cameron said. However, they bring an immense burden in learning and costs. Regulations mean credit unions are looking at new compliance software, forms, and training, and all these cost money that would go to the members. “It takes the focus away from service,” he said. The complexity of regulations can create a chilling effect on attracting new board members. “It puts a premium on hiring a senior manager with compliance knowledge” who survives day to day, instead of a visionary, Cameron said. The credit union needs to create a culture of compliance. “Get the big picture,” he said. “Understand the effect of laws and the fiduciary duty to comply. Make time for compliance in every board meeting. Make compliance part of the job description and ensure staff is fully trained.” Those sentiments were echoed by Chardeen, who said, “Compliance is 100% of my job. I have staff, expertise and training, and attend conferences. The credit union board supports this. Knowing the credit union understands the importance of compliance means I don’t have to sell it. Actual resolution (getting staff to follow new regulations) is more challenging. We have compliance requirements for all individuals on staff. Compliance is built into their job descriptions.” She also noted that the board agenda often covers compliance. “The topics are built in over 12 months so the board’s not tackling all the new rules all at once.” Thompson agreed that a best practice is to get in a regular review cycle. “The examiner wants to see the credit union is on top in compliance.” She advised credit unions to monitor the National Credit Union Administration’s (NCUA) letters to credit unions. The letters indicate what NCUA is thinking about and examiners will often monitor the issues discussed. She also recommended reviewing annual reports and “Compliance Matters” section of Credit Union Magazine. “Boards should ask really great questions,” Thompson said. “The piercing question is the best service you can give, showing you were on top of the compliance issues.” The panel also discussed Regulations E and DD, ATM and one-time debit card rule changes, Reg Z on disclosures under the credit card act, opting in rules for overdrafts, and interchange fee changes.
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