WASHINGTON (2/24/11)--Larger, more complex federal credit unions may need to demonstrate a higher level understanding of financial risk to be in compliance with the National Credit Union Administration’s (NCUA) newly adopted director fiduciary duties rule, Credit Union National Association (CUNA) Senior Vice President of Compliance Kathy Thompson has said. The NCUA late last year established a new set of financial literacy guidelines for federal credit union directors which held that those directors should have the ability to examine their credit union's balance sheet and understand specific financial activities that their credit union takes part in. The NCUA will not test individual directors to assess their financial literacy, but will examine the training programs that federal credit unions have set up for their directors. The NCUA has specifically said that directors should have complete knowledge of risks, including credit risk, liquidity-related risks, and interest rate, compliance, strategic, transaction, and reputation risks. The NCUA’s Office of Small Credit Unions will be conducting board training workshops this spring, and the material covered in those sessions will be appropriate for credit unions that aren’t into more complex business lines, Thompson said. However, Thompson added that it appears that credit unions will need to develop training on more complex issues on their own. Thompson suggested that training policies for more complex credit unions should include specifics on more unconventional activities, and should specifically state that their board will be trained on the financial risks raised by those activities and the steps that the credit union takes to “limit and control” those risks. A credit unions training policy should also reflect a commitment to additional training to address new situations that may arise if and when that credit union adds a new product or service that is expected to impact its business practices. Directors may gain the needed financial understanding through their own in-house credit union training, external training, on the job experience, or online training, the NCUA said. Directors may also train through CUNA's own Center for Professional Development. For the full NCUA letter and more on CUNA's training sessions, use the resource links.