Compliance Strategic Responsibilities

Compliance is ‘conformity: acting according to certain accepted standards’

The credit union has a duty to comply with a range of regulatory and legislative requirements. Credit unions are regulated by both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) and regulate the operations of the credit union and monitor the credit union’s ability to satisfy a range of criteria designed to protect the consumer. Enforcing compliance means ensuring that the credit union adheres to the regulations stated. Effective compliance and controls add to the efficiency and effectiveness of the credit union by:

• Improving regulatory relationship
• Providing clarity and transparency with the members and stakeholders
• Improved member service
• Positive feeling which comes from doing the right thing
• Good internal/external audit reviews of compliance function
• Compliant business decisions
• Improved business systems and technologies
• Increased professionalism of compliance
• Timely rectification of breaches/deficiencies
• Absence of regulatory supervision or enforcement

Expected outcomes

The credit union must have a strong, flexible and cost-effective platform of compliance capable of meeting changing business, regulatory and stakeholder expectations

The credit union must achieve compliance as an integral feature of a well-managed business, capable of creating value through enhanced reputation, member confidence and business efficiency.

Putting into practice

The credit union board must ensure that the role of the compliance function evolves with the development of  the business and its policies and procedures.  Compliance should become a proactive management discipline rather than a reactive ‘policing’ role and become a central factor in the health and sustainability of the credit union. Each credit union must assess the size and scope of the compliance function according to the size of the business and the requirements of the regulator.

“Depending on the nature, scale and complexity of its business, it may be appropriate for a credit union to have a separate compliance function. The organisation and responsibilities of a compliance function should be documented. A compliance function should be staffed by an appropriate number of competent staff who are sufficiently independent to perform their duties objectively. It should be adequately resourced and should have unrestricted access to the credit union’s relevant records as well as ultimate recourse to its governing body.”  CREDS 2.2.29 (PRA and FCA)

However the board should be mindful that compliance, if properly integrated into the business plan, should grow and change alongside the credit union.

Compliance is not an afterthought – it should be integrated into business planning from the outset. This is the outline for an effective compliance strategy.

Long term sustainability

• Provide adequate resources
• Establish clear delineation of roles
• and responsibilities between control functions and risk management particularly between Board, Supervisory Committee and Compliance Officer.
• Recognise compliance as a proactive management discipline rather than a policing exercise
• Use tools and resources to record and quantify the effectiveness of compliance

Integration into the credit union

• Clearly assign compliance functions between compliance officer, board, supervisory and management
• Understand the risk of ineffective compliance and control
• Develop effective policies and procedures and a ‘prevention is better than cure’ mentality
• Ensure the compliance function is included in the business strategy