Outcome of themed “Fitness and Probity” inspections in credit unions released

• Report looked at how credit unions have embedded Fitness and Probity regime.
• Those involved in governance must be capable, competent and financially sound, with the appropriate skills, experience, knowledge and integrity.
• Some good practices identified but deficiencies in a number of areas - Issues identified will be followed up directly with the credit unions concerned.

The Central Bank has today (6 February 2017) published the outcome of a thematic inspection of the implementation of the Fitness and Probity (F&P) regime, which assessed the extent to which credit unions had implemented the regime.

In developing and implementing the F&P regime for credit unions, the Central Bank’s objective is to protect members’ savings through improved governance standards at board and management level. Commenced in 2013, the Central Bank expects the F&P regime to now be well embedded.

The F&P regime is underpinned by the principle that individuals who exercise significant influence and control in a credit union must be capable, competent and financially sound, with the appropriate skills, experience, knowledge and integrity to manage and govern the credit union.

There were examples of well-embedded processes, and these are noted in the Report, however the inspections also highlighted a number of issues, including:

• A minimalist compliance approach in an unacceptably large number of credit unions visited, with limited demonstration of quality and completeness of due diligence on prospective role holders.
• Lack of meaningful succession planning.
• Failure to document processes and to maintain due diligence records on file, resulting in a lack of evidence to support compliance.

Where issues have been identified the Central Bank will follow up directly with the credit unions concerned to address these issues.

The Central Bank expects all credit unions to consider the issues raised in the Report and to examine the implementation of their own F&P policies and procedures, developing and enhancing these where necessary, taking account of the findings and observations set out in this Report.

Read the full report (PDF 1.12MB).

Notes

A Fitness and Probity regime for credit unions came into effect on a phased basis (based on credit union asset size), commencing on 1 August 2013 and being implemented fully on 1 August 2016.