In mid-October, Whatcom Educational Credit Union in Bellingham,Wash., will undergo one of the Evergreen State's first separateexaminations for consumer compliance, now required of allWashington state chartered credit unions with more than $500million in assets.

According to Wayne Langei, president/CEO of the $950 millioninstitution, Whatcom volunteered for the exam, part of a newapproach by the Washington State Department of FinancialInstitutions' Division of Credit Unions to ensure state-charteredcredit unions meet federal standards.

“We offered ourselves as a starter,” said Langei, who has beenwith Whatcom since 1973. “We have so many auditors looking at usanyway, what's one more?”

Credit unions will receive a consumer compliance rating separatefrom its other exam scores. The exam will cover operational areassuch as deposits, consumer lending, mortgage lending and servicing,privacy and consumer information. Additionally, credit unions couldbe grilled on compliance with as many as 24 different federal andstate statutes that include the Bank Secrecy Act, Truth in Lendingand Unlawful Internet Gambling Enforcement Act.

The new exams are expected to bring state-chartered creditunions in line with Consumer Financial Protection Bureau laws andother federal guidelines, according to Linda Jekel, DCUdirector.

“The Washington Division of Credit Unions already has beenexamining for federal consumer protection and regulatory complianceas part of its safety and soundness examinations,” said Jekel, whosits on the NASCUS board. “The only change in 2013 isseparating the compliance exam from the safety and soundness examfor large credit unions. A separate compliance exam report willprovide more effective communication with the largest credit unionsto better protect consumers, to reduce potential liability andfines at state-chartered credit unions, and to work with creditunions on new federal regulations.”

The separate exam helps maximize examiner resources, only two ofwhom have specialized training in complex consumer complianceissues, Jekel said.

Mary Martha Fortney, NASCUS president/ CEO, said she doesn'tthink other state regulators will follow suit and implementseparate consumer protection exams.

“Most states perform consumer protection compliance reviewsduring regularly scheduled safety and soundness exams,” Fortneysaid. “Rather than characterizing Washington's compliance examprogram as a trend, we think this program speaks to the diversityof the state credit union system.”

The Northwestern Credit Union Association, which representsinstitutions in Oregon and Washington, said it has supportedefforts to bring greater consistency to consumer compliance.

“The DFI has been working on this for the past couple of years,”said John Trull, NWCUA's director of regulatory affairs. “Theassociation has supported the delays so that the launch of theprogram goes as well as possible and that the process is in thebest interests of credit unions and regulators alike.”

Currently, 16 Washington state chartered credit unions have morethan $500 million in assets, making them subject to the separateexams, Jekel said. In addition to Whatcom Educational, theregulator plans on scheduling exams with the $11.5 billion BECUbeginning Sept. 23.

“The new procedure is more applicable to credit unions not underCFPB oversight,” said Todd Pietzsch, BECU's public relationsmanager, referring to CFPB's $10 billion asset cutoff for CFPBsupervision. “If we weren't under CFPB we might have to take acloser look at things here.”

The new exams will be completed over a 20-month period, a cyclethat will be ongoing for future exams. Credit unions with assetsfewer than $500 million will be rated on consumer compliance issuesas part of their regular safety and soundness exams, the bulletinsaid.