By Dustin H. DeVore, John M. Bredehoft, Credit Union

Tips to Improve Your Credit Union

Every organization, including credit unions, looks for ways to improve. Complacency can become the silent enemy leading to a multitude of failures and perhaps ultimately, the failure of the organization.

Improving the credit union’s compliance culture is just one topic to focus on to improve the organization. This is likely something you have heard but is worth repeating. Failure to establish a strong compliance culture can lead to legal risk in the form of lawsuits, enforcement actions, civil money penalties, and more, but perhaps even worse, reputational risk. Reputational risk can lead to members losing trust in the credit union if it often has negative publicity from failing to comply with rules, regulations, and laws subjecting the credit union to lawsuits, enforcement actions, etc.

So how does the credit union improve its compliance culture? First, let’s look at what compliance culture is. There are many ways to phrase what compliance culture is, but it boils down to having a proactive approach to focusing on ensuring the credit union has the right tools to ensure compliance with applicable laws, rules, regulations, guidelines, and internal policies and procedures. The credit union should make compliance a high priority. Compliance must be involved in every decision-making process from the beginning; do not wait until a product or service is ready to launch before bringing compliance staff to the table.

Tips for Creating a Culture of Compliance

1. A culture of compliance must start at the top – with the board of directors – and makes its way down to all staff and even third-party service providers. Boards set the tone for the organization. While they are not expected to get into the weeds, credit union boards need to know on a high level about the laws, rules, and regulations that apply to the credit union. Boards must understand the nature of the compliance risks significant to the credit union and empower senior management to measure, monitor, and control these risks.
2. Management should have a clear understanding of which laws, rules, and regulations apply to the credit union as a whole but more importantly to the particular area they manage. Mangers need to be enthusiastic about complying and not just consider it a mundane necessity. They need to demonstrate their dedication to complying with the rules and commit to communicating to staff the importance of complying. Managers should show enthusiasm about compliance.
3. Where possible, establish a compliance officer position within the credit union. This individual’s responsibility should focus on the laws, rules, and regulations that apply to the credit union and disseminate the requirements to each applicable area or department within the credit union. Compliance officers should be part of the implementation process when the credit union wants to begin offering a new product or service – compliance needs to be built into the product and service from the beginning, not added on later as an afterthought. The position can also be where staff relies on the individual to conduct the research necessary in order to complete a task, offer a new product or service, etc. Compliance officers should have sufficient authority and independence to implement and maintain a successful compliance management program.
4. Clear and concise policies, guidelines, and procedures need to be developed and communicated to staff. Compliance needs to be embedded in every task assigned to employees. Having effective tools and the adequate resources they need to perform their duties mitigates errors and omissions and leads to a more compliant product, service and experience. But remember, even the best compliance policies are worthless if staff do not read them, consult them when applicable, and learn that adherence to them is a core value of their immediate supervisor and of the credit union as a whole.
5. Consider implementing a rewards program for staff that recognizes responsible actions for complying the laws, rules, regulations and policies, and procedures applicable to their job duties. This does not have to be elaborate and can be a simple round of applause at the weekly team meetings or perhaps a note of appreciation from management.
6. Training is critical. Employees need to understand the importance of compliance related to their job duties. With on-going training, the credit union sets the employee and organization up for success. Training should never be a “one and done” and should be continuous. Some regulations require periodic training while others encourage periodic training as a best practice. Determine which regulations require periodic training and work the others in so as to not have them forgotten and run the risk of non-compliance. A training budget does not always need to be expensive, and regulations do not dictate any particular training modules. The credit union may consider asking staff members to conduct the training or it may consider a third-party resource dedicated to compliance training. However the credit union decides to train its staff, the most important thing to remember is that sufficient resources and tools are available to mitigate non-compliance.
7. Open communication should be encouraged. Credit unions should develop an environment where staff feel comfortable about speaking up when they see potential risks of non-compliance. Staff should be reminded that if they see something, they should say something. In case someone is not comfortable with open communication face to face, perhaps find a method of being able to report anonymously.
8. Develop methods to measure the effectiveness of the compliance culture. Examples may include tracking of staff training, reviewing the number and severity of compliance violations, soliciting feedback from staff and management, and utilizing auditor examination results. Welcome feedback from internal or independent audits and immediately fix whatever they find. Auditors are there to assist the credit union with potential risks of failing to comply with laws, rules, regulations, and safety and soundness issues. Though they are often viewed as “the bad guys,” it’s important to have them involved in implementing a new product or service and ask for their feedback as to how they would “grade” the implementation if they were conducting an audit. This, along with having the compliance officer at the table, should go a long way in mitigating risks of non-compliance before any product or service is launched.

How does your culture of compliance measure up? Creating – or enhancing – a culture of compliance can be a daunting task depending on the credit union’s current views, staffing, and budget. But it can be done! The Credit Union Team at Kaufman & Canoles can assist credit unions with creating a culture of compliance. Contact us at dhdevore@kaufcan.com to begin improving your credit union.

The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2025.