W E L O O K A T T H I N G S D I F F E R E N T L Y Implementing Fitness & Probity Michael Mullen W E L O O K A T T H I N G S D I F F E R E N T L Y Implementing Fitness & Probity Michael Mullen National Supervisors Forum City Hotel 2 nd November 2013

Provide an overview of the Fitness and Probity regime for credit unions Highlight the roles involved Provide an F&P implementation plan for credit unions 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 The Purpose of this Seminar is to:

W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum Fitness & Probity Phase 1: 1 st August 2013 > 10m assets

3 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum What is F&P? For key credit union officers to….

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is F&P? FitnessProbity Integrity Financially Sound EthicalHonestyCapabilityCompetence Minimum Standards

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What are the F&P Standards? - Assess key officers under three categories:

Pre-approved Controlled Functions CUPCF-1: the chairman of the board CUPCF-2: the manager of the credit union Controlled Functions CUCF-1: a function that exercises significant influence on the conduct of the affairs of the credit union; and CUCF-2: a function which relates to ensuring, controlling or monitoring compliance within a credit union. 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Who are PCFs & CFs?

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 CUPCF -1 Chairman CUPCF -2 Manager CUCF-1 Board of Directors Risk Mgmt Officer Credit Committee Credit Control Committee Membership Committee Nomination Committee Management Team CUCF-2 BOC Compliance Officer Money Laundering Officer Internal Audit positions CF regardless of whether full-time, part-time, contract, voluntary or consultancy CF lists above not exhaustive

Look at the specific competencies required for the role (job description) Assess the role and functions of each person in line with the definitions prescribed in the legislation What decisions is the person involved in making? Are they part of management team? 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 How do I know who the CF’s are?

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Due Diligence? An internal process carried out by the credit union to ensure that all CFs meet and agree in writing to abide by the F&P Standards

IQ form can be used as template Seek and obtain written confirmation from CF as to whether any of Section 4.1 (a) – (l) and Section 5.2 (a) – (e) apply to that person Is the matter material to the performance of the CF? Largely based on self-declaration CF must provide CU with required information CF must comply with the Standards CF must agree in writing to abide by the Standards 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Due Diligence?

New PCF’s (1 August 2013) On in-situ PCF’s now ( 1 December confirm to CBI) New CF’s 1 November 2013 In-situ CFs completed by 1 August 2014 Re-elected/re-appointed PCF (prior to election/appointment and pre-approval) 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 When should DD be Carried Out?

BOC – a member of BOC and a member of Nomination Committee Manager – member of BOD or member of Nomm Comm Nomination Committee – member of Board or member of Nomm Comm Executive CF’s - Manager Other CF’s – matter for the CU *Be aware of conflicts of interest 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Who does Due Diligence?

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Pre-Approval? Process carried out by CBI on PCF’s to assess whether they meet the F&P Standards. It involves the completion of the Individual Questionnaire (IQ) Form and submitting it to the CBI.

On PCF’s only who are new, going for re- election, re-appointment, transfer, promotion after 1 August 2013 (not for in-situ) IQ form can only be submitted online Must be completed in full with relevant information Sections 1-11 by applicant Section 12 by CU (Chair of NC, Chair of BOD, Manager) 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Pre-Approval?

Interview may be requested by CBI with applicant pending pre-approval – risk based approach Pre-approval will take approx. 15 working days Must be pre-approved in writing in advance of appointment, elections etc. Once pre-approved PCF will not require approval by CBI again, once they stay in that role without a break and they continue to meet the F&P Standards Need to confirm upon re-election that they continue to meet the standards 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Pre-Approval?

In-situ CUPCF1 (Chair): In-Situ Chairs are only exempt from pre-approval until the next AGM when they are up for re-election (November this year). At that stage they must complete due diligence and the online IQ form and wait to receive written confirmation from CBI that they have been approved (or not) The four year term of office is retrospective – therefore Chair cannot stand if they have four years in office, may stand for one year if three years in office, etc… After an in-situ Chair is re-elected this year they can then hold onto that approval (unless something changes to a material degree) for the remainder of their four year term, so long as the CU confirms to the CBI that nothing has changed since pre-approval i.e. that they still abide by the F&P Standards 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 What is Pre-Approval?

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Who are the Key Officers Involved? Internal Audit Independently audits controls associated w/ F&P Board of Directors Ensure Policy & Succession Plan Oversee Nomination Committee Due Diligence for – directors, manager, BOC members, (internal audit, RM officer, compliance officer?) Facilitate pre-approval for applicants to Chair & Manager role Maintains necessary documentation Manager Due Diligence for staff CF roles Maintains necessary documentation Implement controls Compliance Officer Ensures CU acting in compliance w/ Regs. TLO

To achieve compliance we recommend: – Strategy (objective on recruitment of key officers) – Succession Plan – Training & Standards Policy – Board Rotation Policy – Nominations procedure – Role Descriptions (all CFs and PCFs) – Terms of reference for the Nomm Comm – Contracts of employment 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 How Can I Prepare/Implement?

Active Nomination Committee / Training Liaison Officer Succession Plan in place Develop a long-term approach to attracting suitable volunteers Training Needs Analysis – identify officers that need qualifications and training Ensure all staff and volunteers are provided with relevant training on an ongoing basis Define who the CF’s are 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 How Can I Prepare/Implement?

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Provide all CF’s with copy of F&P Guidance and Standards Ensure your Board, Nomination Committee and Manger are aware of their roles Commence Due Diligence plans for PCF’s and CF’s Keep records of due diligence Only propose a suitable person for a position Monitor persons (on-going)

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Timeline –Phase 1 DateDevelopment 1 Aug 13 CU >10m assets Standards of F&P apply to all in-situ PCFs All new PCFs will require due diligence carried out and pre-approval from CBI 1 Nov 13 Standards will apply to all newly appointed CFs 1 Dec 13 Due diligence to be carried out on in-situ PCFs List of in-situ PCFs (as of 1 Aug 13) to CBI, confirming they comply with standards (DD has been carried out) and agree to abide by standards Next AGM Ensure that all candidates for role of Chair have been through DD and Pre- approval 1 Aug 14 Standards apply to all CF roles. Due diligence will have to be conducted by this date

Failure by a person to comply, or satisfy the CBI as to an ability to comply, with F&P Standards may lead to: Refusal to appoint a PCF by CBI Where a person is performing a CF, lead to an investigation being conducted in relation to the F&P of that person to perform the relevant functions Suspension or prohibition of a person from carrying out a CF or PCF Apply administrative sanctions procedure to credit unions 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Breaches

IFSAT – appealable decision, if CBI refuse to grant written permission for appointment of PCF Appeal can be made by an “affected person”...” a person whose interests are directly or indirectly affected by an appealable decision” 1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Appeals

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Further Support CU Learning & Development Guidance Dedicated F&P webpage Guidance on Developing a Training and Standards Policy Management of Training in the Credit Union Volunteer Recruitment Strategy Fitness & Probity Checklist Recording of recent roadshows Pathways E-learning CU CPD Scheme Training Courses HR Guidance Succession Plan Guidance CF & PCF Role Descriptors Guidance on Contracts of Employment

1 W E L O O K A T T H I N G S D I F F E R E N T L Y National Supervisors Forum 2013 Further Support /6932 Suzanne Ryan, Kevin Loughnane, or Michael Mullen