Earning a profit while complying with regulations is an ongoingchallenge for credit unions. But the $116 million, Fairlawn,Ohio-based Towpath Credit Union recently discovered new tools thathelp it address compliance roadblocks while continuing to grow itslending program.

The credit union collaborated with regulatory compliance firmPolicyWorks, which is wholly-owned by the Iowa Credit Union League,Ohio Credit Union League, and California and Nevada Credit UnionLeagues. It also began using ComplySight, a web-based compliance management and tracking tool developed by LeagueInfoSight – an initiative developed by several leagues, includingPolicyWorks' three league-owners, to provide useful complianceresources to member credit unions.

PolicyWorks incorporates a management consulting component intoComplySight, making it more powerful for credit unions. Thetechnology, along with PolicyWorks' staff members, reviewsdocuments and files in key areas of risk, allowing Towpath tomanage compliance requirements responsibly.

ComplySight's system pushes out regulatory alerts to informcredit unions about new or upcoming credit union compliancerequirements. The tool also explains credit union regulations andother requirements in a language that is easy to understand andoffers a tracking mechanism for in-process compliance actions.

“The beauty of the system is it allows for an automatic trackingof certain items that need to be accomplished,” PolicyWorks Managerof Compliance Solutions Jason Skemp said.

When Towpath set out to build and manage a comprehensiveregulatory compliance department, its staff understood thechallenges ahead of them.

“I wanted to become the kind of compliance leader who didn'tjust provide a copy of the regulation to a manager, but ratherhelped and supported our management team with creating or updatingpolicies and understanding how policies impacted procedures,”Towpath Director of Compliance and Risk Management Veronica Cromersaid in a case study with PolicyWorks. “I wanted managers to beable to come to me with questions and get answers quickly ineveryday language.”

Prior to bringing on PolicyWorks, the credit union usedspreadsheets to keep track of its compliance management. Today, the credit union uses both theonline system and PolicyWorks' regulatory expertise to complete avariety of strategic compliance tasks, including managing ongoingcompliance, integrating compliance into product development,reviewing marketing materials, completing critical complianceprojects and keeping up with changing regulations.

Skemp explained his firm offers a consultative element ofcompliance management, as well as training on how to utilizeComplySight.

“We'll request specific document disclosures, notices, policiesand procedures,” he said. “We'll go through and review those piecesfor them and provide our findings and recommendations based uponthe key areas of compliance within the tool.”

PolicyWorks also works with the credit union on correctingdeficiencies.

“Credit unionsnow have that ability for follow-up without having to preparemultiple spreadsheets,” Skemp noted. (Click dashboard to expandimage.)

The tool tracks the credit union's progress in key of areascompliance and reports that progress – all on one dashboard. Cromershared this very dashboard with examiners, who seemed to appreciatethe grading system, Skemp explained.

PolicyWorks also helps the credit union stay on top ofcompliance by identifying and filling gaps, providing monthlyreviews and sharing findings with staff.

Managing compliance this has allowed the credit union tobrainstorm new and innovative financial products without the usualhesitation that sometimes stymies development and the creativeprocess.

Towpath staff reported the process opened their minds becausethey knew they could achieve their lending growth goals by settlingany outstanding regulatory concerns early in the productdevelopment phase. For example, the working partnership ensureddocuments accurately disclosed the appropriate fees, Skemp pointedout.

In addition, the credit union's compliance department no longerhas to touch every item. Instead, Towpath's marketing manager cansubmit an item directly to PolicyWorks for review and watch itsprogress in ComplySight, which also has the ability to trackprojects and archive related documents.

ComplySight allows the credit union's staff to focus on largercompliance initiatives rather than put out daily fires. Soon afterthe credit union began using the compliance management tool, itextinguished one potential fire when it discovered a missing,important policy document – Unfair, Deceptive or Abusive Acts andPractices – even though staff members followed their usualcompliance process.

Towpath's ComplySight administrator receives an alert each timea manager submits a question or requests a document review fromPolicyWorks. The administrator can also assign compliance reviewtasks to managers within the tool.

PolicyWorks reviews documents for compliance issues, and if itrecommends changes, it sends an email notification to theadministrator and assigns the task to the manager. An email alsoconfirms that the changes have been successfully made.

“Not only are we finding issues, we are helping to correctthem and creating follow-up to make sure they get corrected,” Skempemphasized.

When Towpath performs annual audits, the administrator canrequest the required documents from a specific manager through thetracking tool. The manager then receives an email requesting thedocument, which they can upload and archive into ComplySight. Ifthe manager does not respond, an email informs the administrator ofthe overdue task.

All compliance projects appear on the main dashboard as inprogress, overdue or completed. Various reports are also available.ComplySight keeps a record of projects from start to finish andmaintains a direct line to PolicyWorks' staff for allquestions.

Towpath uses a variety of resources to keep up with changingregulations. However, the credit union said ComplySight is its mostreliable resource because it keeps everything in one area.

If a new rule applies to the credit union, Cromer can assign itas part of an internal audit or policy revision and notify thespecific department manager of the change. The administrator canalso upload any regulatory compliance document and/or question inComplySight and receive an answer from PolicyWorks within 24hours.

Among the services PolicyWorks offers is a full-scale complianceaudit review for all applicable federal laws and regulations,including: Appraisals, the Bank Secrecy Act, the Children's OnlinePrivacy Protection Act, the Credit Card Act of 2009, the ElectronicFunds Transfer Act, the Electronic Signature Act, the Equal CreditOpportunity Act, the Expedited Funds Availability Act, the FairCredit Reporting Act, the Fair Housing Act, the Home MortgageDisclosure Act, NCUA Rules and Regulations, OFAC, the Privacy Act,the Real Estate Settlement Procedures Act, Reserve Requirements,the SAFE Act, the Service Members Civil Relief Act, Truth inLending and Truth in Savings.

There are dozens of regulations and hundreds of pages of newrules that affect credit unions – even if a credit union has staffdedicated to compliance, third-party assistance can prove extremelyvaluable.

“No one can go it alone in today's regulatory environment,”Cromer said.

Skemp said credit unions often ask how PolicyWorks can makecompliance easier.

“It is not getting any easier when there are new rules comingout seemingly every day or every month that need to be compliedwith,” Skemp said.

PolicyWorks puts all the regulatory compliance elements togetherand tells credit unions what they need to do – something Skemp saidexaminers love to see.

“It allows [credit unions] to be proactive toward compliance,”he said. “Sometimes credit unions do not deal with complianceissues until there is a real issue.”