Minimum Competency Code – ‘And miles to go before I sleep’

The 1^st October 2024 effective date for the expansion of the scope of the Minimum Competency Code 2017 (MCC) to encompass all credit union lending and term deposit activities approaches rapidly and, as the poet Robert Frost said, “The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep.” (from Stopping by Woods on a Snowy Evening).

There’s a lot to be done between now and October for many credit unions to ensure they are effectively managing the risk of non-compliance with the MCC.  Having been involved with credit unions for quite some time now, I would say this is potentially one of the most impactful developments for the structure of the vast majority of ROI credit unions, but particularly small to medium sized ones, since the 2012 Credit Union Amendment Act.

The intention behind the regulatory change is laudable.  The Central Bank have stated that the aim of the MCC regulatory changes for credit unions “is to ensure that credit union members are afforded the same level of protection as consumers availing of similar products and services from other regulated entities”.  However, credit unions registered as retail intermediaries for the selling of insurance or for provision of mortgage lending are already within scope of the MCC.

This impending change expands the scope to credit union staff and volunteers involved in lending of all types, term deposits and complaints handling, which many feel is an unnecessary step given the credit union movement’s already enviable reputation in the financial services market.  However, we are where we are now, so lots to do.  These changes have been in the pipeline since the publication of the associated addendum to the MCC in September 2023, and credit unions with fully embedded risk management functions will have had this on their radar as an emerging risk since then, so it’s past time to get on with adapting CU internal structures to meet the requirements.

The main challenge comes down to human resourcing from accredited staff and/or volunteers, and the risk of being unable to appropriately resource newly in-scope CU activities in compliance with the requirements of the MCC with effect from 1^st October 2024.  CalQRisk’s Risk Advisory Service subscribers in ROI have recently received a very comprehensive, step by step guide to assessing the multitude of risks associated with the expansion in scope of the MCC but in summary, if they haven’t already done so, ROI credit unions must:

1. Identify which roles in their credit union were not previously, but must from October, be performed by a suitably MCC qualified person (whether staff or volunteer), or a person prepared to register for and complete the formal qualification in accordance with the MCC transitional arrangements.
2. Map their current set of MCC accredited staff/volunteer qualifications against the CBI’s approved list on their website: Qualifications | Central Bank of Ireland
3. Based on the outcome of steps 1 and 2, perform a staff and volunteer skills gap analysis to identify additional resourcing needs whilst also taking required segregation of duties, avoidance of conflicts of interest and recent changes from the Credit Union (Amendment) Act 2023 into consideration.
4. Notify staff and/or volunteers without the appropriate formal qualification of the MCC changes and determine which, if any, are willing to undertake the appropriate course of study to achieve the relevant qualification for their newly in-scope role(s) within the required timeline.
5. Develop a resourcing plan to fill the identified gaps and communicate an internal reorganisation plan for the credit union, if necessary.
6. Determine if the credit union can afford the initial upskilling costs, the ongoing costs of continuing professional development associated with such qualifications and potentially the cost of recruiting additional staff if applicable. And if not, identify what other options are available to them to mitigate the risk of non-compliance, and all before 1^st October 2024.

So no time to sleep yet!!