Credit Unions and the Senior Managers Regime: Part 2
The Senior Mangers Regime requires accountability of key decision makers at the credit union. The people who make these key decisions are the persons who normally fall within the scope of the law. There are eighteen senior manager functions that fall within the SMR, with two of these positions being mandatory firstly the SMF-8. This includes The Chairperson, Treasurer, Secretary, and the Credit Union Manager. The other mandatory function is the Anti-Money Laundering Reporting Officer, being SMF-17. All SMR functions have attached to them Prescribes Functions, and it is vital that those who hold these functions are very familiar with their responsibilities. The credit union can decide to whom they wish to allocate the responsibilities.
It is worth mentioning for clarity that not all Directors of a credit union will be deemed to be Senior Managers, but only those who have a prescribed responsibility within the definition of the law. That said the Fitness and Probity must be established for all directors. However, the Fitness and Probity must be established for all Directors, before they can be involved in decision making.
Considering the onerous responsibility that this regime brings to those who hold senior position in credit unions, and the financial consequences involved it should be uppermost on a credit union board’s agenda to protect its board members, mangers and senior persons. Good governance and risk assessment are key in identifying and mitigating some of these risks. However, it would be worthwhile for Credit Union Boards to consider putting in place Director and Officers Insurance to provide the necessary protection to senior person at the credit union. Please do contact CMutual to discuss putting in place Directors and Officers insurance at the credit union, which is an extension to the existing Fidelity Bond Insurance.
In our next article we will provide a common structure of a credit union, and the various roles that are required to be prescribed functions. Also, we will examine closely the Fitness and Probity requirements.