If you are planning to implement an overdraft program, have an overdraft payment program you’ve developed yourself, use a program developed by an outside provider, or implement a software module installed by your core processor you should ask yourself, "Are we ready?"
If you use a third party provider, are you confident they possess the commitment and resources to support your compliance efforts? Is the structure of your service program adequate to meet new compliance directives? Credit unions should carefully review and analyze every aspect of their service.
When the original Guidelines were published for comment over a year ago, we advised our credit union clients that new, highly defined regulations governing overdraft products were on the way and that well-constructed changes to current policies and procedures would be needed to comply. When these new regulations go into effect mid-year, there is clear evidence that NCUA examiners will focus on how well credit unions adhere to the new requirements. Fortunately, there is still time to integrate a compliance program and restructure your existing program if you suspect that it may fall short.
Training & Regulatory Backup
In assessing your current program, let’s look at some basics. First, does everyone on your staff have a working knowledge and full understanding of all the required processes and procedures needed to implement a compliant overdraft payment service as defined by the new NCUA regulations and directives? Remember that everyone on your staff is a front-line ambassador for your credit union. Their complete understanding and buy-in are critical to good service. This element, however, is often overlooked. If your staff is not properly trained, your credit union may be vulnerable.
If you are using a third-party overdraft program provider, they should have a comprehensive staff training program at the top of their service list. And periodic retraining is also important to update everyone on possible regulatory charges that can occur.
As a further extension of staff training, make sure you update your forms, policies and procedures that reflect applicable laws, rules and regulations including the new directives soon to take effect.
Detailed and thorough member communication, disclosure and education are at the core of the new NCUA regulations. A comprehensive review of all your marketing and communication materials should be undertaken as soon as possible. Changes should not only be made to meet compliance requirements, but to complement and enrich the credit union’s member service portfolio and strengthen its ability to attract, retain and grow profitable member relationships.
In analyzing your credit union’s program, it is essential to look to an organization that understands the regulatory landscape. A successful advisory firm will have verifiable operational procedures and engagements with regulatory and legal experts specifically dedicated to compliance. It is imperative for credit unions to align themselves strategically with suppliers who can ensure up to date information regarding broad-reaching issues affecting credit unions.
At Strunk and Associates, LP, we make a promise to all of our credit union clients that we will maintain an ongoing investment in, and commitment to, compliance and matters involving legal due diligence. In addition, we provide our clients with a comprehensive guidance package that includes confidential and proprietary best practices guidelines, examples, illustrations and time-and-examination-tested sample materials. This guidance package is designed to assist our clients in their compliance efforts to ensure all practices and processes associated with the Strunk & Associates’ Program are reliable, prudent, safe and responsible.
So whether you’re considering implementing a new overdraft product or revamping your old one, we encourage you to select your advisors wisely.