NEW ORLEANS (11/9/11)--The pace, complexity and timing of today's regulatory changes are unprecedented and will require credit unions to rethink the way they do business, a CUNA Mutual Group regulatory expert said Tuesday.
Bill Klewin, lending compliance leader, CUNA Mutual Group, tells Lending Council attendees of the 17th annual CUNA Lending Council Annual Conference in New Orleans about the many current and future regulatory challenges credit unions are facing. (Photo provided by CUNA Mutual Group)
Bill Klewin, CUNA Mutual lending compliance leader, speaking at the 17th annual CUNA Lending Council Annual Conference in New Orleans, outlined current and pending regulatory issues that will tax staff, be expensive and potentially have a negative impact on the way credit unions serve members.
"The regulations, coupled with the effect of the new Consumer Financial Protection Bureau (CFPB), will impact all areas of a credit union's operation, including debit and credit cards, home equity and consumer loans, tellers, the way you process mortgage loans, H.R. compensation plans and auditing, to name a few," Klewin said.
Although it isn't clear yet what approach the CFPB will take, it appears the agency is data driven, he added. "They may take a disclosure or change in a rule and take it to the people affected to determine a course," Klewin said. "It's a remarkably different approach, and the old way of doing disclosures may go right out the window. It may make sense but it would be very foreign to how credit unions and regulators are accustomed to operating."
He encouraged credit unions to use the comment-period process, which he called a "meaningful opportunity to have influence as regulators do read the material. It's an opportunity for your voice to be heard on proposed rules, so credit unions should exercise their democratic right and speak up."
Now more than ever, credit unions won't be able to just spend time on compliance, they'll need to maintain a sharp focus on it, Klewin added. He stressed the importance of having a person in the credit union accountable to compliance issues. Noting that because compliance staffers aren't "the most loved person in the organization, it's important that they report at a certain level and not be subject to influence by business areas of the credit union," he said.
A key to making this position effective is finding quality staff who are capable of handling complex compliance issues, sophisticated and knowledgeable, and good at everything they need to do.
"You can build, buy or rent for this important position," he explained. "One, you can take someone from within your organization and give the training and tools to be good at it, or you can go out and buy someone with a proven track record of compliance expertise, but that can be expensive," he said.
Another alternative is to outsource some of the work, such as the credit union's documents business, Klewin added. "You can put it in the hands of a provider that's been in the business and knows the regs. It can take a huge burden off your shoulders," he said.
"The bottom line on this is we're operating in a new world, where you have to think of compliance organizationally, because it will affect almost every aspect of your business," Klewin said. "The pace of new regulations is daunting. Not only will credit unions be challenged but regulators will be, too."