What Can A Compliance Advocate Do For Credit Unions?

New roles are helping credit unions review regulations and disseminate information.

The regulatory burden on credit unions in 2014 is a divisive and heavily discussed topic. To keep up with the surge of new rules and regulations, credit unions are looking for ways to improve how they review and disseminate information in an effort to improve the member experience. Before ORNL Federal Credit Union ($1.5B, Oak Ridge, TN) named Wayne Hood senior vice president and general counsel in late 2012, the credit union had a one-and-a-half person department dedicated to both compliance and BSA. In the past year, much has changed at the 32-branch-strong institution.

I needed my compliance officer to be able to focus on keeping up with the rule changes and writing changes to policies and procedures, Hood says. That did not leave her enough time to implement those changes, much less respond to management’s questions of: Why do we have this? Why do we have to do it this way? Would this be a better way to do it?


data as of 03.31.14

  • HQ: Oak Ridge, TN
  • ASSETS: $1.5B
  • MEMBERS: 160,354
  • EMPLOYEES: 438
  • 12-MO SHARE GROWTH: 1.23%
  • 12-MO LOAN GROWTH: 6.09%
  • ROA: 0.42%

To address hurdles, ORNL increased its commitment to compliance. Now the credit union’s compliance department has five dedicated employees plus two employees who work in legal. The credit union even created a compliance advocate position to reinforce the department’s efforts.

The Compliance Advocate

Leslie Daugherty became the credit union’s first compliance advocate when she moved from ORNL’s human resources department to compliance in February 2013. It was Daugherty who actually named the role.

I was going to use something generic, Hood says. She said, I’d like to be called a compliance advocate because that’s what I’m going to be doing advocating for people to stay in compliance and trying to explain to them why it’s important.’

Compliance to me is like the kitchen junk drawer, Hood continues. If there is anything that seems legal or regulatory, it goes to compliance. So compliance is a great place to take assessment of where risk is in terms of everything from member service to legal risk.

The role of the compliance advocate is twofold. First, the employee gains as much face time with as many operational departments and employees as possible to determine the institution’s compliance needs by asking questions such as what do employees need from compliance, where are the opportunities in compliance, where are the obstacles, and how can the compliance department be a better resource? The first time Daugherty made the rounds among the credit union’s headquarters and its branches, she received more than 200 responses that formed the basis of one of ORNLs biggest strategic goals for 2014 to write a compliance manual of sorts. According to Hood, the manual describes how compliance interacts with all levels of the institution, from tellers to the CEO.

It impresses the importance of compliance on every single role within the organization, he says.

In addition to helping determine the institution’s compliance needs, the compliance advocate explains new rules and regulations to employees, contextualizing them with real world examples. Prior to the creation of the compliance advocate, the credit union sent emails explaining changes. Now, the compliance advocate allows the department to have high-level explanatory discussions with employees and listen to their feedback.

The biggest improvement Hood has seen since the position’s inception is the improvement in communication that has led to employees understanding the why instead of just the what. The time the advocate is able to devote to employees helps them understand the rules and regulations and reduces questions. Additionally, Daugherty can identify patterns the institution should address.

3 Reasons To Invest In Compliance

Because Daugherty came from HR, the credit union needed to determine how to integrate an employee with little compliance knowledge into a compliance-heavy position. But Hood is confident Daugherty’s attitude will help her quickly develop an expertise in the area.

[She] cares about this credit union, Hood says. She loves her fellow employees. They know she is trying to help this be the best credit union we can be, so she has instant credibility with our staff.

Communication skills play a large role in this position. Any compliance advocate must be able to talk and listen to staff. Additionally, the advocate must understand the distinct needs and operations of every department they visit to know which rules and regulations matter.

One of the advocate’s main goals is to improve the member experience, though the results of the employee’s work are often intangible. Hood says the advocate is responsible for the feedback that influences a range of processes and transactions, from account openings for members to health savings account access for employees. However, determining a concrete return on investment from this position and the compliance department in general remains a challenge. When it comes to benefits, Hood cites the value in the advocate’s work, better procedures, and a stronger audit program.

When you put those three things together, our compliance program is robust, he says. We are beginning to see it pay off in terms of a decreased number of exceptions, a decreased number of problems with paperwork, and a decreased number of member complaints.

Hood hasn’t run the numbers to show a figure for how much the department has saved the credit union on an annual basis, but he has seen improvements in account openings and decreases in risk areas. To wit: the credit union’s average share balance has grown 6.6% since March 2013, according to first quarter Search Analyze data on CreditUnions.com, and it has improved its delinquency ratio three basis points year-over-year, according to Peer-to-Peer analytics by Callahan Associates.

You can’t always quantify what you save, Hood says. What you do is determine from the feedback you’re getting from your members and your staff that you’re giving better member service.

May 5, 2014

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