Compliance Blog

Posted by Anthony Demangone

Last week, I read this column aloud at our Regulatory Compliance School.  I wrote the article roughly three years ago, but I believe it still rings true.  Attendees at the school wanted a copy, so I decided to post it here for general consumption.  How do you save money on compliance?   Here are my thoughts.

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I read the trade press.  I know about shrinking ROAs and tightening budgets.  Well, the budget doctor is in.  While I will not solve all your budget woes, I can help in one area.  I am going to show you how to get the most out of your compliance officer this year.

If you follow these six simple steps, your compliance officer will be more effective, cover more ground, provide better insight, and save your credit union time and money.  If you follow these six steps twice, you may even save twice as much. 

1.  Story time.  If you want a child to succeed in school, you should read to them every day.  Compliance officers are no different.  (Well, you get the idea.)  A good compliance officer will spend oodles of time reading.  And you’ll need to give them the room, space and subscriptions to do so.  Newspapers.  Trade journals.  NAFCU compliance newsletters.  NCUA draft and final proposals.  Your compliance officer is supposed to be the man or the women with all the answers.  Answers do not grow on trees.  They grow on boring articles, regulations, laws and guidance documents.  Give your compliance officers the time and resources needed to pick that fruit.

2.  Play outside.  A good compliance officer will spend time out of his or her cage.  Don’t worry – they usually find their way back.  Area roundtables and luncheons are a great way to pick up knowledge and bounce questions off other credit union compliance professionals.  In addition, it will allow your compliance officer to network.  That always pays dividends, unless you enjoy reinventing the wheel.

3.  Play with others.  If you want to maximize your compliance officer’s power, plug them into your credit union.  Insert them into your product development process.  Include them as early as possible in advertising campaigns.  In fact, include them as early as possible in any process where you envision their involvement.  While this is not always possible – it often is.  There is no better way to clip the wings of a compliance offer than by dropping an emergency request on their desk that needs immediate attention.  If you need some answers on an issue for next month’s board meeting or advertising campaign, ask now.  Not the day before the deadline.  Unless you like living on the edge.

4.  Protect them.   Compliance officers often deliver bad news.  That’s just part of the job.  Just don’t shoot the messenger.  I recently spoke with a compliance officer who was under siege.  An area attorney who performed mortgage closings for the credit union was sending copious amounts of chocolate, cookies and free lunches to the credit union to say “thank you” for the business.  The trend alarmed the compliance officer, who was worried about a possible RESPA violation.  She brought the issue up before senior management.  Rather than receive a thank you, the compliance officer was ostracized by her coworkers for placing the free victuals at risk.

And you may need to protect your compliance officer from yourself.  A good compliance officer should be able to speak freely and frankly with senior management.  Intimidation, tempers and fists pounding on desks will turn risk mitigators into “yes” men and women.  Believe you me – you don’t need any more “yes” people hanging around.  Look what it did to Michael Jackson.

5. The truth.  The whole truth.  And nothing but the truth.  When you pass along a compliance project, give your compliance officer the complete picture.  Often, I speak with compliance officers who are in the dark about important issues that are related to their research project.  A good compliance officer should ask questions, but you can immediately increase their efficiency by giving important details along with the question.

6.  Don’t be penny wise and pound-foolish.  Think of a compliance officer as an insurance policy.  Compliance officers keep you out of trouble by fixing problems – or better yet – preventing the problems from forming.  But not all insurance policies are the same.  Skimp on your policy, and you may find it lacking when you file a claim.  You can go “bargain basement” on your insurance and compliance officer, but I’d urge you to reconsider.  To build a strong compliance officer, you must nurture the position.  This involves training, training, and more training.

Some of my suggestions may seem counterintuitive.  More training?  More time devoted to research?  More trips out of the office?  And this is supposed to make us more efficient and save us money?  

Yep.

Please allow another analogy.  Right after college, I had to stock up my first apartment.  On the list was a can opener.  I bought the least expensive one.  Two weeks later, after my hand had cramped for the 20th time while trying to open a can of soup, I went back out and bought a better can opener.  It cost me more, but I can now use my right hand again and the thought of having a bowl of soup no longer causes me to break out in a cold sweat.
When you get down to it, a compliance officer is just a fancy can opener.  Rather than open a can of soup, they’ll provide knowledge, insight and sure-footedness to your credit union.  They’ll make examinations run smoothly.  They’ll manage your compliance risk efficiently.  But only if they have the time, resources and knowledge to do so.