The 1st October 2024 effective date for the expansion of the Minimum Competency Code 2017 (MCC) to encompass all credit union lending and term deposit activities is approaching rapidly. As Robert Frost wrote, "The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep."

There is considerable work to be done for many credit unions to ensure they're effectively managing the risk of non-compliance with the MCC. Having worked with credit unions for quite some time, we recognise this as potentially one of the most impactful developments for Republic of Ireland credit unions since the 2012 Credit Union Amendment Act, particularly affecting small to medium-sized institutions.

The Intention Behind the Change

The intention behind the regulatory change is laudable. The Central Bank has 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".

Credit unions already registered as retail intermediaries for selling insurance or providing mortgage lending fall within the scope of the MCC. This impending change expands the scope to credit union staff and volunteers involved in all types of lending, term deposits, and complaints handling.

Many feel this is an unnecessary step given the credit union movement's already enviable reputation in the financial services market. However, we must face the reality of the situation and take action accordingly.

The Main Challenge

The main challenge comes down to human resourcing from accredited staff and volunteers, and the risk of being unable to appropriately resource newly in-scope credit union activities in compliance with the MCC requirements from 1st October 2024.

Our Risk Advisory Service subscribers in the Republic of Ireland have recently received a comprehensive, step-by-step guide to assessing the multitude of risks associated with the expansion in scope of the MCC. In summary, if they haven't already done so, Republic of Ireland credit unions must:

1. Identify Roles Requiring Qualification: Determine which roles must now be performed by a suitably MCC qualified person (whether staff or volunteer), or someone prepared to register for and complete the formal qualification in accordance with the MCC transitional arrangements.
2. Map Current Qualifications: Compare your current set of MCC accredited staff and volunteer qualifications against the Central Bank's approved list available on their website.
3. Conduct Skills Gap Analysis: Based on steps 1 and 2, perform a staff and volunteer skills gap analysis to identify additional resourcing needs whilst considering required segregation of duties, avoidance of conflicts of interest, and recent changes from the Credit Union (Amendment) Act 2023.
4. Communicate Requirements: Notify staff and volunteers without the appropriate formal qualification of the MCC changes and determine who is willing to undertake the appropriate course of study to achieve the relevant qualification within the required timeline.
5. Develop Resourcing Plan: Create a resourcing plan to fill the identified gaps and communicate an internal reorganisation plan for the credit union, if necessary.
6. Assess Financial Impact: Determine whether the credit union can afford the initial upskilling costs, the ongoing costs of continuing professional development, and potentially the cost of recruiting additional staff. If not, identify what other options are available to mitigate the risk of non-compliance, all before 1st October 2024.

Conclusion

So there's no time for rest yet. The implementation of these MCC requirements represents a significant undertaking for credit unions, but it's essential for maintaining the high standards of service and protection that members deserve. Credit unions that approach this challenge proactively and systematically will be best positioned to meet the October deadline whilst maintaining their commitment to serving their communities effectively.