Where does your compliance fit?

In order to cut expenses, credit unions have merged jobs and duties to the point that Compliance may oversee, or be part of, other departments or business units.  This is akin to putting the kids in charge of the cookies.   In order to develop or provide services to members, the compliance function may take a back seat to the sales function.  Rules may be “adapted” to fit the wants, and the risks of noncompliance may increase.

The risk also expands when employees’ salary or bonuses are tied to the credit union’s growth.  Employees see the rewards in the short term by way of a fattened wallet, but do not see the long term or back-end costs of noncompliance.

Where does the credit union’s Compliance fit – are they a separate unit from other departments and business lines; do they have direct reporting to an executive, or board of directors, that is also independent from the sales functions; are salaries and bonuses tied to credit union performance or to safety; do they have the power to identify and mitigate compliance risks?

Compliance should work closely with departments to provide guidance for complying with regulatory requirements, but should not be embedded in the management or development of products or services.

It might be time to identify the risks of Compliance within the organizational and operational charts, and make sure that the credit union’s cookies stay safe in the member’s accounts.

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