Small credit unions feeling squeezed by compliance costs

In the world of financial services, modifications to regulatory governance can change rapidly. In fact, some would argue that each new day in the credit union business brings brand new changes that alter the industry from the way things ran at the close of business the prior day. Surrounded by a constant evolution of regulations and legal expectations, credit union leaders are tasked with the enormous responsibility to remain informed and compliant while still paying affectionate attention to the bottom line of the business.

Increasingly strict stipulations from governmental bodies are making one thing very clear: the cost of credit union compliance is an ever-present concern.

In February, Washington D.C. played host to the annual CUNA Governmental Affairs Conference. Throughout the course of five days, keynote speakers from major media outlets and executive leaders from around the country presented opinions, predictions, and fact-based findings. Among the most impactful of presentations was a breakout session entitled CUNA’s Cost of Regulatory Burden Study Resultswhereby the true financial impact of credit union compliance was revealed, following a major study conducted by Cornerstone Advisors.

According to the Regulatory Burden Study, “the combined effect of increased costs and reduced revenues due to regulation amounted to at least $7.2 billion in financial impact for credit unions” in 2014 alone. I was among the attendees of the CUNA GAC who learned firsthand what the data tells us about the state of the industry.

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