Role of the Nomination Committee

1. Role of the Nomination Committee

2. The aim of this session is to outline the role and responsibilities of the Nomination Committee under new legislation & regulation. AIM

3. Objectives By the end of the session, participants will: Understand the role of the Nomination Committee Understand the election process within the credit union Understand the Fitness & Probity Standards for credit unions Be cognisant of conflicts of interest Understand the need for the Nomination committee to carry out a skills analysis and consider Succession Planning

4. Role of the Nomination Committee The Nomination Committee: Members are elected at the organisation meeting after the AGM The committee is composed of a minimum of 3 and a maximum of 5 members who must all be directors Casual vacancy – board elect a director to fill the vacancy until the next meeting (after the AGM) where an election should be held to fill the vacancy

5. Role of the Nomination Committee The Nomination Committee shall be responsible for: (As per Section 56 (B) of the Act) Identifying candidates to be nominated Accepting nominations of candidates Proposing candidates for election by a general meeting – all candidates proposed through the nominating committee Assisting the credit union in performing its obligations in relation to pre-approval controlled functions (PCF’s) Assisting the credit union in carrying out due diligence in the application of standards of fitness and probity

6. Role of the Nomination Committee The Nomination Committee shall be responsible for: Informing candidates, in writing, of the time commitment expected prior to proposal Ensuring appropriate succession plan in place for the board Ensuring adequate induction training takes place as soon as possible and no later than 6 months following appointment Arranging additional training Maintain a register-Records of service and formally review membership of those of more than 12 years in aggregate.

7. Role of the Nomination Committee The Nomination Committee shall : Review the board of directors at least once a year to identify deficiencies (Training Needs Analysis) Consider the balance of skills, experience and knowledge on the current board of directors when considering proposing candidates Not propose appointments or allow them to proceed where conflicts of interest exist or could arise in a way which could significantly affect the ability of the board to operate

8. Fitness and ProbityRegime

9. Central Bank’s aim to improve overall governance standards at board and management level by ensuring that:- individuals who exercise significant influence and control are capable, competent and financially sound with appropriate skills, experience, knowledge and integrity to manage and govern their institution Fitness & Probity Requirements

10. Credit union members have confidence that those in senior positions can demonstrate they are…. competent capable act honestly ethically and with integrity and are financially sound Fitness & Probity Requirements

11. Part 3 of the Central Bank Reform Act 2010 was applied to credit unions in Sept 2012 Tailored Fitness and Probity regime for credit unions Introduced on a phased basis:– 1st August 2013 for CU’s with total assets >€10 million 1st August 2015 for all other CU’s Apply existing Fitness and Probity regime to those who are authorised as a retail intermediary – 1st August 2015 start date Fitness & Probity Requirements

12. Proposed that the Fitness and Probity regime for credit unions will prescribe:- 2 Controlled Functions (CF’s) Exercises significant influence on the conduct of affairs (CUCF-1) Related to ensuring, controlling or monitoring compliance (CUCF-2) Anticipated will include - board of directors, the supervisory committee, the risk management officer, the compliance officer, the MLRO, the internal audit function 2 Pre-approval Controlled Functions (PCF’s) Chairman of the Board (CUPCF-1) Manager (CUPCF-2) Fitness & Probity Requirements

13. What will Board Oversight Committee have to do? Conduct appropriate due diligence to assess the fitness and probity of those proposed Ensure they meet the standards Agree to abide by them Not permit a person to perform a CF unless satisfied on reasonable grounds Get pre-approval from Central Bank for PCF (expectation that nomination committee involved) Fitness & Probity Requirements

14. Three main standards for assessment:- Competence and Capability Honest, Ethical and Acting with Integrity and Financial Soundness Fitness & Probity Requirements

15. Competence and Capability:- Relevant experience and/or qualifications MCC if applicable (i.e. ACCUP/Pathways & CU CPD) Take into account Size and activities of CU Responsibilities of the position Sound knowledge of business and responsibilities (including regulatory & legal requirements) Shown capacity in other positions to do the job Existing responsibilities Fitness & Probity Requirements

16. Honest, Ethical, Acting with Integrity:- Be honest Diligent Independent-minded Act ethically and with integrity and fairness Operate without conflicts of interest Assess if ability to perform the function is adversely affected by any of the circumstances set out in the standards Fitness & Probity Requirements

17. Financial Soundness:- Manage their affairs in a sound and prudent manner Demonstrate that the role is not adversely affected by the fact that they:- Have defaulted upon any payment due Subject to a judgement debt Subject of a bankruptcy petition Adjudicated a bankrupt and it’s un-discharged Director of an entity subject of insolvency Above will not necessarily render an individual ineligible – but needs to be assessed Fitness & Probity Requirements

18. Due diligence Is an internal process carried out by the credit union (Nomination Committee) It’s about the care and attention that is expected to be put into showing that the key personnel meet the F&P requirements Not permit a person to perform a CF unless satisfied on reasonable grounds that they meet the standards Get pre-approval from Central Bank for PCF prior to election to the role / appointment (expectation that nomination committee involved) Fitness & Probity Requirements

19. Fitness & Probity Requirements Due diligence Conduct appropriate due diligence to assess the fitness and probity of those proposed Meet with the potential Director Complete IQ form (or CU’s own form) Copy of documentation/evidences Checks carried out by CU (Referee’s, judgements etc) Follow-up meeting (if required) Ensure they meet the standards (competencies for role etc) Receive letter of confirmation re time commitment and concurrent responsibilities Receive written confirmation that they agree to abide by the standards on an ongoing basis prior to election and annually thereafter and will advise of any material changes Conflicts of Interest discussed & noted

20. Fitness & Probity Requirements Who is responsible for conducting due diligence on the following? • Board of Directors – Nomination Committee (Nom Comm) • BOC – BOC (use experience of Nom Com) • Manager – Board of Directors or Nom Comm • Nom Comm – Nom Comm or Board of Directors (1 off) • Other CFs – matter for the CU

21. Due Diligence Y = Checks undertaken by CU SC = Self Certify I/A = If applicable

22. Credit Unions with total assets > €10 million 1st Aug 2013 – In-situ PCF’s 1st Aug 2013 – New PCF’s apply for pre-approval 1st Nov 2013 – All newly appointed CF’s 1st Dec 2013 – List of PCF’s to Central Bank and confirm due diligence conducted 1st Aug 2014 – Standards of F&P apply to all CF roles in the CU & have conducted due diligence All Credit Unions 1st Aug 2015 – In-situ PCF’s 1st Aug 2015 – New PCF’s apply for pre-approval 1st Nov 2015 – All newly appointed CF’s 1st Dec 2015 – List of PCF’s to Central Bank and confirm due diligence 1st Aug 2016 – Standards of F&P apply to all CF roles in the CU & have conducted due diligence Fitness & Probity Requirements

23. The Election Process

24. How is the new process different to previous years? Letting the members know they can no longer nominate from the floor. When will you do this? How will you do this? What will you do to ensure it is a positive message What structures can be put in place to ensure the process runs smoothly? The Election Process

25. Why Interview volunteers? To ‘get to know each other’ – a chat! Gain factual information on volunteer Match skills to tasks/role Discover their expectations Give information Explore the match between the cu and the volunteers needs – recruit or not? ‘Duty to care’ – professional recruitment & selection Interviewing prospective directors

26. Before Advise them the purpose is to assess fitness and probity Have given them the job spec and responsibilities of a director Have outlined the time commitment Plan and prepare for the interview(s) – be clear on your outcome During Set the environment Open ended questions Two–way communication Look for specifics After Make decision Follow-up with the person Put forward for election, if appropriate Interviewing prospective directors

27. Conflicts of Interest

28. Section 69 Ensure individually and collectively they act in a manner free from conflicts of interest Conflict of interest between the officers own interests and the interests of the credit union e.g. ensure acting for the benefit of the member, in the interest of the credit union and not for personal gain or favouritism ensuring there is no clash between personal interests and professional obligations Each officer shall take steps to ensure his/her role in the credit union is not influenced by any other interest Conflicts of Interest

29. Section 69 (continued) Policy to identify, manage and resolve conflicts of interest Every officer identify potential conflicts Declare conflict of interest in writing and/or make declaration at a meeting Within 3 working days of declaration enter into the register of conflicts of interest Not take part in discussions and withdraw from the meeting during which matter relating to conflict of interest is considered If reoccurring conflicts - guidance re if appropriate to resign Conflicts of Interest

30. Skills Analysis & Identifying Training Needs

31. S56(B) 7 … consider the balance of skills, experience and knowledge on the current board of directors Taking account of Number of vacancies to be filled Potential conflicts of interests Review composition of board at least once a year to identify any deficiencies in composition especially balance of skills Identifying Skills

32. Skills/Competence Matrix A table that helps you review the skill, knowledge and competency required to carry out a specific job Helps assess the training needs Assists in identifying the gaps within the current Board Builds commitment to the development of new skills Acts as a guide to the suitability of an individual to a particular role Discussion tool for performance reviews – training can be assessed, mapped-out, reviewed and evaluated Identifying Skills Gaps

33. S56(B)(4)(i, j, k) ... adequate induction ... Sufficient appreciation of and appropriate training about the strategy, operations and performance of the credit union ... Induction training takes place as soon as possible and no later than 6 months following appointment Arranging additional training for members of the board ..... to the extent that the nomination committee considers it necessary in order for the BOD to make informed decisions Identifying Training Needs

34. Training Needs Analysis (TNA) Purpose – what courses are needed and for whom Ensure the person has the skills and knowledge to do the job in a prudent, compliant, member focussed manner There are benefits for the:- Members Volunteers Staff Nomination Committee works with the Training Liaison Officer (TLO) (and others as appropriate) Identifying Training Needs

35. Identifying Training Needs Training Needs Analysis (TNA) Use competencies when conducting a TNA Competency is about having both the knowledge required and being able to perform in that area Simple survey based on list of competencies associated with the role A review of the learning and development needs to assess the gaps in knowledge, skill, competence, behaviour, attitude = fill the gaps through training and development to meet the boards strategic objectives Certain roles organise their own TNA e.g. Board Oversight Committee as part of their planning process

36. Identifying Training Needs Training Needs Analysis (TNA) If the CU have a performance management system in place where each office reviewed on an on-going basis TNA part of same If not TNA is a stand-alone process Start by identifying core competencies to operate in a compliant, ethical and efficient manner Then identify role specific competencies Contact each officer to explain TNA and arrange to meet with them Determine training requirements Info confidential to board & management

37. Identifying Training Needs Training Needs Analysis (TNA) Mandatory training AML DP H&S CPD Induction training Plan (budget, barriers, availability of officers etc) and prepare Be clear on the purpose and area of focus Choose your method Carry out the TNA Collate the results Source appropriate training providers and courses Individualised training plan circulated to each officer

38. Succession Planning

39. A process for identifying and developing internal people with the potential to fill key positions in the credit union in a structured manner Increases the availability of experienced and capable volunteers and employees Nomination Committee – ensure succession plan in place for the Board of Directors (also required for Management Team = responsibility of BofD’s) Develop plan (6 steps) Put it in motion Monitor, evaluate and adjust plan Smooth transition of successor Succession Planning

40. 6 Steps Determine the type of plan Put a succession-planning team together Identify the main factors that will influence your plan Link your succession plan to the credit union’s overall strategy Identify sources for successor candidates Shape action plans Succession Planning

41. Recruiting volunteers What are you doing to recruit volunteers? do you use the local volunteering centre? member survey, volunteer information booklet, information on website etc? What else can you do? Where do you advertise? What information do you include? Where and how to recruit volunteers

42. Interesting questions …. What is your experience of the volunteer cycle in your credit union? E.g. how long do people stay? What do you think the future volunteer cycle will be in your credit union? Volunteer Cycle in a Credit Union

43. Structures to support volunteers

44. Structures to support volunteers Structures to support Volunteers:- Send out the right message Create the right environment Long term approach Volunteer policy Volunteer charter Appoint mentors Motivating volunteers Thanking volunteers

45. Supports availableto Nominating Committee

46. Supports Available

47. Central Bank Website

49. Any Questions? Closing