Look For The Hidden Value in NCUA Exam Compliance FindingsJuly 6, 2015
I just finished reviewing a recent NCUA exam report. I try to see if there are any unusual findings or trends in findings from client to client when reviewing these reports so that I can keep my clients up-to-date on NCUA’s focus and trends in their exams. Preparation for your exam in key areas can be crucial to a smooth, constructive exam.
Give Thanks For Little Things
I often hear from clients and read articles from various industry sources that indicate NCUA is picking on the credit union in question with their picayune findings and comments. In many cases, I tell the client or think to myself that the credit union in question should be thankful that this is the only finding the NCUA has for them. In this complex world of technology and compliance, there are so many things that can go unnoticed or be misinterpreted. In today’s environment of regulatory fines and fees, many compliance errors could grow to be a huge regulatory and financial burden if left unaddressed.
In the exam report that I was reading today, one of the key findings was that a credit card APR disclosure was made in the incorrect font size on the website. (In case you are wondering, Regulation Z clearly requires that this particular credit card disclosure be made in at least a 16-point font.). Initially, I thought to myself that this was another picayune finding by NCUA. But as I sat here thinking about it, this finding actually points out how the regulator is adding value to their exam process for many institutions even if the credit union does not immediately realize it.
Read, Digest, Repeat
Small institutions rarely have the ability to hire a full-time compliance officer to make sure that they are up-to-date with all of the rules and regulations that must be abided by. Larger institutions may have one or two employees devoted to compliance issues, and most likely only the largest credit unions may staff a full-blown compliance department. Many new regulations today are well over 100 pages that must be read and digested and then implemented. Let’s face it, there are so many compliance requirements just related to periodic reporting to authorities and monitoring of data that timely review of websites, forms and applications may be put on the back burner by any-size institution. NCUA’s seemingly small, initially somewhat annoying findings related to compliance issues such as font-size in disclosures actually helps to fill the compliance gap and may reduce the cost to the credit union in finding compliance errors such as this.
No matter what size credit union you are with, improving your institution as a result of your NCUA exam’s compliance findings should be looked upon as a valuable by-product of this unavoidable and often stressful regulatory event.