Collaborating Your Way to Compliance

We often talk about collaboration in the context of business and product development; however, collaboration can also play an important role in regulatory compliance. It is undeniable that the current regulatory climate is complex and can even seem insurmountable at times. It is showing no signs of slowing down and credit unions will have to adapt in order to maintain regulatory compliance without breaking the bank and sacrificing growth and production. While the basic principles of regulatory compliance remain the same, more and more credit unions are finding that the old way of doing things no longer works and there is now a need to find new and innovative ways of training employees and staying in compliance. Collaboration is a way to do just that.

Compliance was once thought of as being ancillary to the products and services offered by the credit union – a cost of doing business. Now with the recent onslaught of regulations, compliance has taken a place as a stand-alone entity. No longer can a loan officer juggle managing the compliance of the department and processing loans. The increase in regulations has forced credit unions to spend large sums of money to maintain regulatory compliance. Most hire new employees to serve as compliance officers, conduct costly third party audits, train their employees on a regular basis regarding the changing regulations, and implement new software to assist them in keeping up with regulatory changes. Employees spend hours on training and implementing new regulations. To an attorney like myself, taking measures like this to ensure compliance is invaluable, but to a credit union it is tough to see the return on the thousands of dollars and hundreds of man-hours invested in compliance each year.

One goal of collaboration is to help credit unions solve problems by leveraging scale, expertise, and efficiencies. Every credit union has strengths and weaknesses when it comes to regulatory compliance. For example, your credit union may have a strong mortgage lending program, but you do not have a large credit card portfolio, you simply offer it as a member service. Creating a network of local credit unions can help to capitalize on other credit unions’ strengths to improve upon your own credit union’s weaknesses. Quarterly meetings to discuss recent regulatory changes and steps each credit union is taking towards compliance are a low cost alternative to formal seminars and training. Many times it can be more useful as other credit unions will share your perspectives while speakers in seminars may not.

Another goal of collaboration is to turn problems into opportunities. Credit unions that have successful compliance programs or who have formed networks like the one discussed above can form a CUSO to provide compliance services to its owners and other non-owner credit unions. The CUSO may specialize in certain areas such as mortgage lending, or NCUA regulations, or provide a more broad based compliance solution for its clients covering all aspect of credit union compliance. These CUSOs not only offer typical compliance resources such as written materials like forms and policies, but they also offer more unique resources like shared compliance officers. For the owners, these CUSOs are a way to take an expense and turn it into an income generating event.

Compliance should not be looked at as a competition but rather an opportunity to work together and to benefit from each other’s strengths. Compliance is too expensive and too burdensome a task to go at alone.

Amanda Smith is a partner with Messick & Lauer PC in Media, PA. She can be reached at 610-891-9000 or