Comply or Die

Don't skimp on compliance, especially as it relates to security.

August 27, 2010
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What to ask vendors

Stickley advises scrutinizing software or services in seven ways. Make sure it:

1. Meets regulators’ needs.
2. Is continually updated, not just at set intervals but on an as-needed basis.
3. Has reporting capabilities, including standard reports, which address all compliance issues, and ad-hoc reports, which address more specific issues.
4. Ties back to IT and risk-assessment audits; no piecemeal approach.
5. Can manage policies seamlessly and tie them all together so there’s no scampering around when an auditor arrives.
6. Is user-friendly. Is this a one-time buy or is it living, breathing, evolving, and updating?
7. Explains regulations clearly and in language everybody can understand.

King advises paying attention to how vendors update their compliance software, using Fair and Accurate Credit Transaction (FACT) Act compliance as an example. “On one hand, you can create a separate product or item that addresses FACT Act requirements and then encourage credit unions to buy it. Or you can ask what the new regulations are trying to do.

“In the FACT Act’s case,” he continues, “the concern is over ID theft, the majority of which is via card fraud—nothing new. So, we asked, can we adapt our current software and adjust our current technology to treat FACT Act requirements as just another scenario? That’s what we did.”

The coming year

King observes that the regulatory burden on all financial institutions increases year by year. “When the economy slacked, regulators eased up a little, but now they’re getting super-focused again. You’ll see a push among credit unions in certain asset classes and locations. Big states like California, Texas, New York, and Illinois always received the toughest regulation. But now regulators are looking harder at the heartland.”

Nevertheless, King advises, credit unions should be careful when new regulations come out. “Don’t jump and react quickly. Assess the impact of regulatory changes before deciding to purchase software. Good compliance software vendors should be able to adapt and have you covered in no time.”

Next: Risk-Rate Members

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