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Compliance Talent Gap Challenges Credit Unions

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Is your credit union struggling to find and retain just the right compliance pros for all the various rules and regulations that must be followed? With the talent gap expanding more quickly than CUs can keep up, outsourcing a portion of compliance is becoming an enticing solution. See how one credit union is making such a strategy work.

It is not uncommon to find a credit union with a pressing need for compliance expertise. What is unusual, however, is finding the right people to fill that need.

There are multiple reasons credit unions have difficulty hiring experienced compliance professionals. Chief among them is the sheer speed with which the discipline has evolved. Just a decade ago, compliance specialists managed one or two regulatory changes each year. That is far from the case today.

Now, credit union leaders juggle countless proposed, final and modified rules across categories. Doing so requires an expansive skill set and an almost impossible command of multiple financial products and services. Regardless of an individual’s history or knowledge of a credit union’s operations, it remains difficult to manage the compliance effort as one person.

For some credit unions, this has meant expanding the cooperative’s competency by building an entire team dedicated to regulatory compliance. Of course that means conducting the search, performing the onboarding and paying the salary, benefits and other costs for multiple employees. In 2016, Robert Half Management Resources projected above-average increases in starting compensation for every type of compliance role at U.S. businesses of all sizes.

What’s more, all this applies to those credit unions that are fortunate enough to find knowledgeable individuals available for hire in the first place. Those cooperatives that are unable to locate the right people are left to coordinate expensive, time-intensive training for existing staff members, who must get up to speed quickly on the intricacies of various rules and regulations.

Aside from the cost and time burdens of training, credit unions that invest in building up their internal compliance competency often face another problem not too far down the road: Employees who possess or obtain compliance knowledge can be difficult to retain. Compliance expertise is in high demand these days, and those who have it can tell you, the calls from head hunters are never ending, as are the enticing offers. According to CareerBuilder, Des Moines, Iowa – a city of just 600,000 people – had need for more than 450 compliance professionals within the last year alone. Look at New York City during the same time period and that number jumps to 4,300 open compliance positions!

Of course, a new job offer isn’t the only reason individuals with compliance experience may leave the cooperative. A tidal wave of retirement parties has already begun to crash in on the credit union industry as 50 percent of community financial institution CEOs and other C-level managers are expected to leave their posts in the next five years. Coined the Silver Tsunami, the mass exodus of Baby Boomers from a wide swath of professions is sure to have an impact on the credit union industry’s network of compliance specialists. In fact, CareerBuilder data indicates well over half of the individuals who hold a compliance officer position are over 45. Nearly 28 percent of them are over 55.

Outsourcing a portion of the execution of compliance strategy and duties has become a welcome solution for many credit unions confronting the compliance talent gap.

After Centris Federal Credit Union’s compliance officer left to pursue an opportunity with a large national bank in the area, the cooperative took a threefold approach to replacing her position. First, leadership promoted an internal candidate who now has responsibility for the credit union’s Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance. Second, the credit union partnered with PolicyWorks to manage compliance reviews and audits as well as to serve as an on-demand resource for the inevitable daily questions that arise. Third, the credit union shifted many of the day-to-day compliance activities to its director of risk advisory services, Gary Fillman.

In addition to those daily compliance tasks, Fillman also leads Centris FCU’s internal compliance committee, which is composed of employees from each of the credit union’s business units that have compliance responsibilities. “As our compliance demands continue to increase, we’ve worked to cover the three lines of defense – having adequate policies/procedures and controls, a monitoring and review process, as well as an internal audit program,” said Fillman. “Hiring individuals with experience in each of these areas – particularly if you are doing business in a competitive market – is often outside the budget. At the same time, there aren’t enough hours in the day to mentor an entry-level person. For us, filling the gap with an outsourced partner has been an ideal part of the solution.”

The decision to hire, outsource or rely on a combination of the two methods is a highly individualized one. The objective is to ensure compliance with fast-paced, complex regulatory changes. Achieving the peace of mind that comes from knowing compliance is being managed by knowledgeable, member-focused individuals can be powerful. With the assurance that it’s all being handled competently, credit union leaders can focus on the perfect execution of their mission and the flawless services of their members.

Brian Godwin is Director, Compliance Solutions                       
(515) 221-1851                                                                                      
briang@policyworksllc.com                                                               

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