3 minutes
This is bonus coverage from “Culture of Compliance” in the December 2016 issue of Credit Union Management magazine.
This summer, Wells Fargo executives admitted that they had fired 5,300 employees who were found, under pressure to meet sales goals, to have opened 1.5 million unauthorized deposit accounts and 500,000 credit cards. Such high profile cases provide a vivid illustration of what can happen when an organization does not emphasize compliance throughout its culture.
The investigation by the Consumer Financial Protection Bureau revealed that thousands of Wells Fargo employees felt that their jobs and pay depended on meeting sales goals.
Managers “created this problem with the stressful requirements to close a certain number of accounts,” notes Cindy Williams, VP/regulatory compliance for PolicyWorks, Des Moines, Iowa.
Compliance gets more difficult and harder to police as credit unions grow and offer more diverse products and services, she says. “That’s why it’s important that a compliance representative has a seat at the table when a credit union is planning any new product, process or procedure.”
The Wells Fargo case also illuminates the need to consider carefully what kinds of behaviors an organization might be encouraging with sales incentives. Any initiative that pushes frontline staff to promote products that aren’t in members’ best interests might seem to justify bad behavior, she cautions.
Maintaining a culture of compliance also extends outside the credit union to scrutinize vendors’ policies and practices, says Sean Cronin, president of ProcessUnity, Concord, Mass. “Regulators really want more transparency to the customer, which means credit unions need to adhere to risk management practices with their third-party relationships. (See also “On Compliance: 11 Vendor Management Resources.”)
“And they need to consider, if this third party were to go out of business or change their business model, would this impact the services we provide to members? And do we need to worry about concentration risk?”
“A culture of compliance is not just the right tone, the right culture, the right people—but also putting in the right checks and balances inside and outside your four walls,” he adds. “Regulations won’t contract but certainly will expand, and the regulatory environment will continue to be challenging, so the foundation has to be there.”
Attitudes in financial services have shifted over the last few years from a tendency to put compliance off to the side to an imperative that “now we have to do this,” notes Dale Scott, CCE, VP/Compliance for InStride Resources, Olds, Alberta, a subsidiary company that is owned by and provides support services to $583 million Mountain View Credit Union, in Olds; $451 million 1st Choice Savings and Credit Union in Lethbridge; and $614 million Lakeland Credit Union in Bonnyville. “What we’ve tried to do is move to the message: It’s just the way we do business now. We do need to comply with new rules and ask more questions. That’s the kind of culture we’re trying to operationalize.”
Karen Bankston is a longtime contributor to Credit Union Management and writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Portland, Ore.
