Learnings from Asia—Governance in focus

Fast-changing geopolitical dynamics are making global connection more important than ever for the credit union movement. Sharing credit union developments across different countries continued as the World Council of Credit Unions (WOCCU) recently joined the Asian Confederation of Credit Unions (ACCU) in Bangkok Thailand for its Regulators Conference. Many of the themes discussed in Bangkok are additive to the conversations happening in the US credit union system.

The conference brought together credit union association leaders and government regulators from more than 15 countries across Asia. Discussions focused on governance practices, regulatory oversight structures, and capital standards. WOCCU shared key components of sound regulatory frameworks and global best practices in risk management and oversight.

Woven throughout the conference was a shared recognition that credit unions must remain centered on the “people helping people” mission. The connection between strong governance and the ability to prevent reputational, safety, and soundness risks is increasingly relevant in the U.S.

Much of the discussion centered around the positive impact credit unions have on their local communities and how to maintain the movement’s most compelling case for regulatory relief, all tied to effective governance practices. Here are some key takeaways for U.S. credit unions:

Conduct and competency expectations for boards of directors are at the forefront of regulators’ minds as they address conflicts of interest, safety and soundness concerns, and requests to offer more complex services. Governance modernization is happening not only in Asia, but globally. These changes are placing greater emphasis on internal policies, procedures, and board oversight. The quality of governance is increasingly viewed as a determining factor in the long-term success of credit unions, and global standard setters are placing more attention on oversight practices.

As the need to advocate for regulatory relief and proportional requirements grows, governance standards matter. The credit union mission and structure are our advocacy advantage, but they are reliant on demonstrating strong governance practices. The board of directors, elected by the members, is a unique feature of our movement. Regulators across Asia are unwilling to expand the powers and authority of credit unions without credit unions demonstrating their governance is trustworthy and effective.

Good governance is a fundamental tool for protecting the credit union mission and preventing the types of shortcomings that can damage reputation and trust. Credit unions in Asia shared lessons learned about the harm that can come from weak conflict-of-interest practices. The connection between mission and governance was a consistent theme, with leaders emphasizing the importance of strengthening governance today while also engaging younger members to understand and carry forward the cooperative model.

ACCU’s conference demonstrated the value of bringing credit union leaders and government regulators together for cross border dialogue on proportional regulatory frameworks that strengthen the credit union system. International standard setting bodies continue to focus on governance requirements, and U.S. credit unions can expect continued attention on governance standards and best practices from regulators in the years ahead.

As the global landscape evolves, stay tuned for additional resources and regulatory best practices from WOCCU’s advocacy team, including work related to fit and proper standards and strong governance practices.