Understanding the meaning and context of complex legislation and how to apply it, presents a big challenge for some organisations. This may be particularly true for some credit unions, especially those run by volunteers who may not have the requisite high level skills, knowledge and experience required to manage legal and regulatory compliance risk across the business. Where there is no such suitably qualified person in-house, the credit union may deploy the services of a professional compliance firm or regulated law firm, but the cost of traditional advisory services is likely to be expensive.
Whether the credit union undertakes the compliance function itself or outsources it, the board retains overall responsibility and accountability. The senior leadership team and significant harm functions are subject to the SM & CR, so taking steps to ensure that appropriate compliance measures are put in place must be a top priority for credit unions.
Example: FCA SYSC 8 requires all firms to ensure that their IT Cloud and other service agreements comply with the rules contained therein.
In real terms, in order to ensure compliance with SYSC 8, TCF, reduce exposure to risk and protect member interests, the board must also be sure that proposed contract terms and conditions are fair/equitable, comply with other legislation such as GDPR (NDC’s /processing etc) and common law contract principles. The board must be fully aware of any risk relating to breach of contract / non-compliance and the impact this could have before entering into any agreement with third parties. The board will be answerable to the regulator, its members and other affected stakeholders if things go wrong.
This is just one example of how laws and regulations from the wider legal environment overlap. Essentially, the compliance function requires knowledge of the legal and regulatory environment, risk management framework, systems and controls and the ability to advise and guide the board/ senior leadership team on a whole range of ancillary business laws and regulations.
Getting the right legal and regulatory compliance support from a highly qualified, credit union specialist source goes a long way to ensuring the survival and success of the organisation on so many levels.
May I take this opportunity to introduce myself as that support and what is believed to be the UK's first, formally recognised* independent Credit Union Legal and Regulatory Compliance professional. (*See About Me for more information).
I have undertaken projects for a diverse range of credit union clients, with different common bonds, product types (exempt and regulated), membership numbers and net value. I have established compliance risk management frameworks and provided advice and guidance to senior leadership teams and operational staff on a range of legal and regulatory concerns.
If your credit union has a specific legal and regulatory issue that it needs assistance with, you can be assured that I will provide you with high-level, bespoke, cost effective solutions that are right for your credit union.
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