4 Reasons Why Redisclosures Are Essential to your CU's Operations
By Keri McCollum, Product Manager, Wolters Kluwer
You could say uncertainty is the only certainty in the financial services industry. In addition to the challenges of a global pandemic, credit unions are navigating constant change – whether a rapidly evolving regulatory environment, a dynamic risk landscape, or increasing member demands.
Credit unions are also experiencing a dramatic shift in how they conduct business. As members switch between branch locations, online, and mobile devices, providing consistent information across these channels is an ongoing challenge. Credit unions that weather the storms of change effectively understand that consistent communication is the most critical piece to ensuring you remain compliant and transparent.
Disclosures are an important part of building a strong communication and compliance strategy. But providing disclosures doesn’t just apply to new members at account opening. Existing members must also be kept apprised of any changes to your terms and conditions, no matter how big or small, by issuing a redisclosure to all impacted members.
Surprisingly, redisclosures are an area that’s often overlooked by credit unions. But if you aren’t communicating changes in your terms and conditions, the consequences for your credit union are high. Here are four reasons why redisclosures are essential to your credit union’s operations.
- Meet regulatory requirements. Providing new and existing members with up-to-date disclosures is not only mandatory but keeps your credit union in compliance with all federal regulations. State and local levels may also have rules requiring credit unions to disclose certain information. And the cost of non-compliance is high, including regulator audits, fines, and reputational harm.
- Mitigate risk. Providing all members with clear transparency into your policies and procedures keeps your credit union on your regulators’ good side, as noted above. It also protects you from a class action lawsuit or other legal action for not treating all members fairly.
- Reduce complexity and simplify operations. Redisclosures ensure that the same terms and conditions are applied to all members for both fairness and transparency. And if all members have the same terms and conditions, it takes the guesswork out of how to process transactions for credit union staff.
- Serve your members and your community. Redisclosures keep your credit union compliant with all state and federal regulations, enabling your doors to remain open so you can continue to serve the members of your community with the financial products and services they need. Simply put, it’s just good business.
With redisclosures so critical to your business, do you have a plan in place to ensure your content is compliant and your members’ disclosures are consistent and current? While some credit unions maintain their disclosure content in-house, that’s a cumbersome job and those resources could be better spent on more revenue-generating activities.
Working with a content provider can free you from creating your own disclosures while continually monitoring for changes across multiple jurisdictions. And compliance experts are who specialize in credit unions, understand what laws and regulations impact your business, and provide warranted content are the icing on the cake.
With the difficulties associated with managing increasingly unpredictable risks, this is an excellent reminder to make sure your credit union isn’t overlooking the importance of redisclosures. Remember: communication, consistency, and compliance all play a starring role in keeping your regulators happy.