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

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 Implementing Fitness & Probity Michael Mullen National Supervisors Forum City Hotel 2nd November 2013

2. 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 • 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 National Supervisors Forum 2013

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 Fitness & Probity Phase 1: 1st August 2013 > 10m assets 2 National Supervisors Forum 2013

4. 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 What is F&P? “be capable and competent with the appropriate skills, experience, knowledge and integrity to manage and govern the credit union prudently” For key credit union officers to…. 3 National Supervisors Forum 2013

5. What is F&P? 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 Minimum Standards 1 National Supervisors Forum 2013

6. What are the F&P Standards? - Assess key officers under three categories: 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 Financial Soundness - Unsatisfied judgement debt - Undischarged bankruptcy - Director of insolvent entity Competence & Capability - Relevant experience - Relevant training & qualification - Conflicts of interest Honesty, integrity & ethics - Disqualified director - Subject to FSO /CBI complaint - Director of struck-off company 1 National Supervisors Forum 2013

7. Who are PCFs & CFs? 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 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 National Supervisors Forum 2013

8. 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 • CF regardless of whether full-time, part-time, contract, voluntary or consultancy • CF lists above not exhaustive 1 National Supervisors Forum 2013

9. How do I know who the CF’s are? 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 • 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 National Supervisors Forum 2013

10. What is Due Diligence? 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 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 1 National Supervisors Forum 2013

11. What is Due Diligence? 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 • 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 National Supervisors Forum 2013

12. When should DD be Carried Out? 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 • 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 National Supervisors Forum 2013

13. Who does Due Diligence? 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 • 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 National Supervisors Forum 2013

14. What is Pre-Approval? 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 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. 1 National Supervisors Forum 2013

15. What is Pre-Approval? 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 • 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 National Supervisors Forum 2013

16. What is Pre-Approval? 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 • 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 National Supervisors Forum 2013

17. What is Pre-Approval? 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 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 National Supervisors Forum 2013

18. Who are the Key Officers Involved? 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 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. • Internal Audit • Independently audits controls associated w/ F&P TLO 1 National Supervisors Forum 2013

19. How Can I Prepare/Implement? 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 • 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 NommComm • Contracts of employment 1 National Supervisors Forum 2013

20. How Can I Prepare/Implement? 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 • 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 National Supervisors Forum 2013

21. How Can I Prepare/Implement? 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 • 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 National Supervisors Forum 2013

22. Timeline –Phase 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 1 National Supervisors Forum 2013

23. Breaches 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 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 National Supervisors Forum 2013

24. Appeals 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 • 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 National Supervisors Forum 2013

25. Further Support 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 1 National Supervisors Forum 2013

26. Further Support 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 +353 1 614 6754/6932 learning@creditunion.ie Suzanne Ryan, Kevin Loughnane, or Michael Mullen www.centralbank.ie www.creditunion.ie www.culearn.ie 1 National Supervisors Forum 2013