What's the biggest burden, financially or otherwise, for credit unions around the country? Many would agree that it's compliance.
The National Credit Union Administration clearly stated that compliance services are an acceptable activity in which credit union service organizations can engage in a letter In a letter dated more than five years ago. The only real caveat, according to the agency is "that CUSO staff involved in providing guidance on regulatory compliance services must be careful that they are not providing legal advice that would require an attorney's license under state law."
The rules are fairly straightforward. The need is definitely clear. So why haven't compliance CUSOs sprouted like weeds in the ensuing five years?
The truth is, there are a number of CUSOs that either specialize in compliance or at least offer compliance services as one of their product lines. One issue with several of them, however, is that membership in the CUSO is somewhat restricted.
For example, Xtend, a CUSO based in Grand Rapids, Mich., provides a wide range of services, including compliance monitoring. "Our compliance monitoring services have experienced solid growth during the past two years based on the regulatory environment of the mid-market credit unions we serve," said Xtend president Scott Collins in a recent public statement. "Utilizing our team to execute some of the log management tasks on a daily, weekly, and monthly basis, allows our customer-owners to drive down their overall cost of compliance in order to not only survive, but thrive in an increasingly challenging marketplace."
But here's the rub. Xtend only provides services for credit unions running the CU*Base core processing platform from CU*Answers. What's more, the Xtend website barely mentions compliance services, and excludes them completely from its published price list. Compliance seems to be this CUSO's best kept secret.
"The mission of the NW Compliance Group is to lower business risk and the cost of compliance review and monitoring through standardization, collaborations, and tools," according to the CUSOs website. Again a worthy goal, and again a restricted membership. NW Compliance Group was formed by four Washington state credit unions: Salal Credit Union, Gesa Credit Union, Washington State Employees Credit Union, and IQ Credit Union. The CUSO apparently operates for the sole benefit of these four institutions.
COMPASS 4 CUs is a wholly owned CUSO of Belvoir Federal Credit Union. Unlike some of its brethren, this CUSO specializes in providing compliance and consultative services to credit unions, credit union leagues, and other credit union service providers nationwide. The CUSO has about two dozen credit union members, as well as a number of credit union organizations. For example, the CUNA Center for Professional Development uses Compass 4 CUs for compliance services.
Compliance CUSOs seem like a natural extension of the credit union philosophy of cooperation among institutions. Why more CUSOs haven't been formed to tackle this growing problem remains a mystery. If your credit union is struggling to stay ahead in the compliance game, the best advice could be to consult your peers. If there's not currently a CUSO that can meet your compliance needs, perhaps you should consider forming one.
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