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The Barbados CoBarbados CoBarbados CoBarbados Co----operative & Credit Union League operative & Credit Union League operative & Credit Union League operative & Credit Union League (BCCULL) Ltd(BCCULL) Ltd(BCCULL) Ltd(BCCULL) Ltd. is pleased to bring to you the third issue of We previously piloted two issues and had a favourable response to this quarterly, electronic magazine is intended to help Co-operatives to acquire the knowledge necessary to deal with a rapidly changing financial environment; regulation and supervision of credit unions. We will continue to bring you news/ articles which keep you abreast of what’s happening in the world of co-operatives - locally, regionally and worldwide. We look forward to your feedback and urge you to Get We look forward to your feedback and urge you to Get We look forward to your feedback and urge you to Get We look forward to your feedback and urge you to Get Involved by sending us your photos, articlesInvolved by sending us your photos, articlesInvolved by sending us your photos, articlesInvolved by sending us your photos, articles, , , , promotionspromotionspromotionspromotions and article suggestions for publicationand article suggestions for publicationand article suggestions for publicationand article suggestions for publication....

What’s Inside? Understanding the FSA and the Regulatory Requirements Under the FSC …3 Training Schedule At A Glance …5 Insurance and You

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Roles & Responsibilities: A Look At the Supervisory Committee

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Keeping It Simple: Money Grows In Credit Unions

…9 The Employment Rights Act and Its Impact on Credit Unions

…10

Financial Services Commission Financial Services Commission Financial Services Commission Financial Services Commission GuideliGuideliGuideliGuidelines Strengthen Credit nes Strengthen Credit nes Strengthen Credit nes Strengthen Credit Unions’ Ability to Manage RisksUnions’ Ability to Manage RisksUnions’ Ability to Manage RisksUnions’ Ability to Manage Risks

In an effort to ensure that the credit union sector is better equipped to manage the risks associated with its operations, the Financial Services Commission (Commission) has issued the sector with a set of guidelines. The Commission, explaining that it had identified a number of key risk areas which present particular challenges for the Sector, said the 15 guidelines were essentially to help strengthen credit unions’ ability to effectively manage risks.

The benefits of instituting these guidelines The benefits of instituting these guidelines The benefits of instituting these guidelines The benefits of instituting these guidelines are that they:are that they:are that they:are that they: ٥ Establish codes of conduct to govern Establish codes of conduct to govern Establish codes of conduct to govern Establish codes of conduct to govern

the sectorthe sectorthe sectorthe sector

٥ Strengthen the regulatory frameworkStrengthen the regulatory frameworkStrengthen the regulatory frameworkStrengthen the regulatory framework

٥ Promote stability in the market placePromote stability in the market placePromote stability in the market placePromote stability in the market place

٥ Promote best practicesPromote best practicesPromote best practicesPromote best practices

٥ Provide transparency in the Provide transparency in the Provide transparency in the Provide transparency in the

regulatory procregulatory procregulatory procregulatory processessessess

Specifics of each GuidelineSpecifics of each GuidelineSpecifics of each GuidelineSpecifics of each Guideline Guideline 1Guideline 1Guideline 1Guideline 1----3 (Safety and Soundness)3 (Safety and Soundness)3 (Safety and Soundness)3 (Safety and Soundness)Corporate Governance and set out the expectations of the Commission with respect to the safety and soundness of credit unions and the roles and responsibilities of the Board and management in ensuring an effective governance system is established. Having acknowledged the varying levels of sophistication of the operations of the credit union sector, the

Financial Services Commission Financial Services Commission Financial Services Commission Financial Services Commission nes Strengthen Credit nes Strengthen Credit nes Strengthen Credit nes Strengthen Credit

Unions’ Ability to Manage RisksUnions’ Ability to Manage RisksUnions’ Ability to Manage RisksUnions’ Ability to Manage Risks

In an effort to ensure that the credit union sector is better equipped to manage the risks associated with its operations, the Financial Services Commission (Commission) has issued the sector

The Commission, explaining that it had identified a number of key risk areas which present particular challenges for the Sector, said the 15 guidelines were essentially to help strengthen credit unions’

The benefits of instituting these guidelines The benefits of instituting these guidelines The benefits of instituting these guidelines The benefits of instituting these guidelines

Establish codes of conduct to govern Establish codes of conduct to govern Establish codes of conduct to govern Establish codes of conduct to govern

Strengthen the regulatory frameworkStrengthen the regulatory frameworkStrengthen the regulatory frameworkStrengthen the regulatory framework

Promote stability in the market placePromote stability in the market placePromote stability in the market placePromote stability in the market place

Provide transparency in the Provide transparency in the Provide transparency in the Provide transparency in the

3 (Safety and Soundness)3 (Safety and Soundness)3 (Safety and Soundness)3 (Safety and Soundness) … Relate to Corporate Governance and set out the expectations of the Commission with respect to the safety and soundness of credit unions and the

of Directors and management in ensuring an effective governance system is established. Having acknowledged the varying levels of sophistication of the operations of the credit union sector, the

Commission has tailored the Guidelines to two categories – credit unions with assets in excess of $10 million and those with assets of less than $10 million. Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee Procedures)Procedures)Procedures)Procedures) … Relates to the responsibility of the Supervisory Committee to receive and investigate complaints about the management of the society. Its objective is to establish a transparent process to ensure the concerns of members of the credit unions are adequately addressed. The guideline also highlights the procedure for the referral of complaints to the Commission.

Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management)interest of ensuring that credit unions are able to meet the needs of members transacting business with them, this guideline requiresestablish and implement policies that will allthem to effectively manage all aspects of operational liquidity. Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management)credit unions to implement policies that address the management of credit risk that they face. Consequently, credmandated to implement credit risk policies which address:

• limits and prohibitions on credit exposures

• assessment criteria and monitoring systems for

each authorised credit instrument

• management of delinquent and doubtful loans

Guideline 7 (Guideline 7 (Guideline 7 (Guideline 7 (Operational Risk)Operational Risk)Operational Risk)Operational Risk)are exposed to operational risk which relates to the failure of systems and controls. This guideline seeks to ensure that credit unions address this risk by implementing policies which cover, among other things:

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Commission has tailored the Guidelines to two edit unions with assets in excess of

$10 million and those with assets of less than $10

Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee Guideline 4 (Supervisory Committee ---- Complaints Complaints Complaints Complaints Relates to the responsibility of the

Supervisory Committee to receive and investigate about the management of the society.

Its objective is to establish a transparent process to ensure the concerns of members of the credit unions are adequately addressed. The guideline also highlights the procedure for the referral of

mission.

Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management)Guideline 5 (Liquidity Risk Management) … In the interest of ensuring that credit unions are able to meet the needs of members transacting business with them, this guideline requires credit unions to establish and implement policies that will allow them to effectively manage all aspects of

Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management)Guideline 6 (Credit Risk Management) … Requires credit unions to implement policies that address the management of credit risk – one of the major risks that they face. Consequently, credit unions are mandated to implement credit risk policies which

limits and prohibitions on credit exposures

assessment criteria and monitoring systems for

each authorised credit instrument

management of delinquent and doubtful loans

Operational Risk)Operational Risk)Operational Risk)Operational Risk) … All credit unions are exposed to operational risk which relates to the failure of systems and controls. This guideline seeks to ensure that credit unions address this risk by implementing policies which cover, among other

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• defined and prudent levels of decision-making

authority

• the security and operation of a management

information system

• safeguarding premises, assets and records of

financial and other key information

• disaster recovery and business continuity plans

• outsourcing services

** Guideline 8 (Doubtful Loans and accompanying ** Guideline 8 (Doubtful Loans and accompanying ** Guideline 8 (Doubtful Loans and accompanying ** Guideline 8 (Doubtful Loans and accompanying Application Guide) … The Commission is reviewing Application Guide) … The Commission is reviewing Application Guide) … The Commission is reviewing Application Guide) … The Commission is reviewing this Guideline, and will rethis Guideline, and will rethis Guideline, and will rethis Guideline, and will re----circulate it to the sector circulate it to the sector circulate it to the sector circulate it to the sector for consultation.for consultation.for consultation.for consultation. Guideline 9 (Market Risk Investments)Guideline 9 (Market Risk Investments)Guideline 9 (Market Risk Investments)Guideline 9 (Market Risk Investments) … Establishes the Commission’s standards with respect to credit unions’ management of market risk which arises out of investment activities permitted under the Cooperative Societies’ Act (CSA). Credit unions must implement policies which proactively seek to mitigate the risk inherent in this activity. Guideline 10 (Capital Management)Guideline 10 (Capital Management)Guideline 10 (Capital Management)Guideline 10 (Capital Management) … The major role of capital in a credit union is to serve as a safety net for member’ savings in the event of adverse events. This guideline requires credit unions to determine and maintain appropriate levels of capital consistent with the CSA. Management is expected to be aware of their capital requirements and implement procedures to monitor them. Guideline 11 (Deposits)Guideline 11 (Deposits)Guideline 11 (Deposits)Guideline 11 (Deposits) … Through this guideline the Commission establishes its expectations regarding the deposit of the funds of a credit union pursuant to the CSA and deposits for liquidity purposes pursuant to the Co-operative Societies Regulations, 2008. The rationale is to ensure that all credit unions establish policies which will result in risk mitigation and compliance with the CSA and its Regulations.

Guideline 12 (Fundamental Changes)Guideline 12 (Fundamental Changes)Guideline 12 (Fundamental Changes)Guideline 12 (Fundamental Changes) … From time to time it may become necessary for credit unions to consider fundamental changes to their structure and operations. This guideline ensures that any contemplated changes to the organisation are informed by a Board-approved policy. Guideline 13 (Valuation of Real Property)Guideline 13 (Valuation of Real Property)Guideline 13 (Valuation of Real Property)Guideline 13 (Valuation of Real Property) … Credit unions are permitted by the CSA to invest in real property within prescribed limits. Consequently, guideline 13 seeks to remove ambiguity in determining compliance with the CSA by outlining the Commission’s expectations regarding the acquisition and valuation of real property. Guideline 14 (Qualifications)Guideline 14 (Qualifications)Guideline 14 (Qualifications)Guideline 14 (Qualifications) … The Commission is mandated to ensure that adequate levels of probity prevail in the sectors it regulates. Guideline 14, therefore, communicates the Commission’s expectations on qualifications of directors and officers of a credit union and should be considered in conjunction with the provisions of the CSA. Guideline 15 (Directors ReGuideline 15 (Directors ReGuideline 15 (Directors ReGuideline 15 (Directors Remuneration)muneration)muneration)muneration) … In the interest of transparency and full accountability to the owners of credit unions i.e. the members, the Commission requires credit unions to implement policies which address the remuneration of their Directors and Committee Members. This guideline should also be considered in conjunction with the CSA. The Commission is encouraging all credit unions to ensure they are compliant with the issued guidelines and that they update their policies, procedures and practices accordingly.

For furFor furFor furFor further information contact: ther information contact: ther information contact: ther information contact: Financial Services CommissionFinancial Services CommissionFinancial Services CommissionFinancial Services Commission

#34 Warrens Industrial Park, Warrens, St. Michael#34 Warrens Industrial Park, Warrens, St. Michael#34 Warrens Industrial Park, Warrens, St. Michael#34 Warrens Industrial Park, Warrens, St. Michael Tel: 421Tel: 421Tel: 421Tel: 421----2142 Fax: 4212142 Fax: 4212142 Fax: 4212142 Fax: 421----2146214621462146

Understanding FSA and the Regulatory Requirements Under the FSC (continued)

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Did You Know? ٥ CoCoCoCo----operators General Insuranceoperators General Insuranceoperators General Insuranceoperators General Insurance Head

Office is now located at Upper Collymore Rock, St Michael

٥ For your convenience, CoCoCoCo----operators operators operators operators General InsuranceGeneral InsuranceGeneral InsuranceGeneral Insurance Company operates from three locations which are all open on Saturdays from 9 am until 1 pm.

٥ Whether you are travelling by land or sea, CoCoCoCo----operators Generaloperators Generaloperators Generaloperators General now offers you travel insurance protection

٥ CoCoCoCo----operoperoperoperators Generalators Generalators Generalators General offers Roadside Roadside Roadside Roadside AssistanceAssistanceAssistanceAssistance to all its private motor policy holders.

٥ You should report all vehicular You should report all vehicular You should report all vehicular You should report all vehicular accidents immediately to your accidents immediately to your accidents immediately to your accidents immediately to your insurance companyinsurance companyinsurance companyinsurance company

٥ It is an offence to tint your wind screen It is an offence to tint your wind screen It is an offence to tint your wind screen It is an offence to tint your wind screen to such an extent that the driver is unto such an extent that the driver is unto such an extent that the driver is unto such an extent that the driver is un----identifiableidentifiableidentifiableidentifiable

٥ A burglary claim can be resolved A burglary claim can be resolved A burglary claim can be resolved A burglary claim can be resolved much quicker if you make a list of much quicker if you make a list of much quicker if you make a list of much quicker if you make a list of stolen valuables and their valuesstolen valuables and their valuesstolen valuables and their valuesstolen valuables and their values

٥ The risk of being involved in an The risk of being involved in an The risk of being involved in an The risk of being involved in an accidents significantly increased while accidents significantly increased while accidents significantly increased while accidents significantly increased while driving and using a cell phone at the driving and using a cell phone at the driving and using a cell phone at the driving and using a cell phone at the samesamesamesame timetimetimetime

For further information contact:For further information contact:For further information contact:For further information contact: CoCoCoCo----operators General Insuranceoperators General Insuranceoperators General Insuranceoperators General Insurance

Tel: 431Tel: 431Tel: 431Tel: 431----8600860086008600

Insurance & You

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RRRRoles & oles & oles & oles & RRRResponsibilities of esponsibilities of esponsibilities of esponsibilities of the Supervisory Committeethe Supervisory Committeethe Supervisory Committeethe Supervisory Committee

This committee is responsible for reviewing and evaluating the performance of elected officials and employees, and to make recommendations for operational improvement. Members of the committee are elected by the membership in general meetings, to serve as ““““the watchdog”the watchdog”the watchdog”the watchdog” of the co-operative’s affairs. The committee has a minimum of three members.

Persons elected to the Supervisory Persons elected to the Supervisory Persons elected to the Supervisory Persons elected to the Supervisory Committee should Committee should Committee should Committee should be of sound be of sound be of sound be of sound judgment, inquisitive but not judgment, inquisitive but not judgment, inquisitive but not judgment, inquisitive but not accusative, should have the ability to accusative, should have the ability to accusative, should have the ability to accusative, should have the ability to be objective, should have keen be objective, should have keen be objective, should have keen be objective, should have keen foresight in order to detect and foresight in order to detect and foresight in order to detect and foresight in order to detect and uncover potential problem areas.uncover potential problem areas.uncover potential problem areas.uncover potential problem areas.

The Supervisory Committee’s function should never be under-rated. If the committee functions well, it

٥ increases members’ confidence in the co-operative,

٥ points out minor problems before they grow,

٥ and safeguards the Board’s and Manager’s integrity through good audits.

The committee’s responsibilities include:

٥ making periodic meaningful audits of the co-operative’s accounts and submitting the reports of the Board

٥ verifying members’ share, deposit and loan balances and maintaining confidentiality of information

٥ suspending directors, officers or Credit Committee members for cause

٥ calling special membership meetings for cause

٥ reporting to the membership at general meetings

٥ evaluating the operational procedures of the co-operative and making recommendations for improvement

Your selection to examine Your selection to examine Your selection to examine Your selection to examine the records of your the records of your the records of your the records of your cocococo----operative should be operative should be operative should be operative should be considered an honour and considered an honour and considered an honour and considered an honour and an important opportunity an important opportunity an important opportunity an important opportunity for real service. With a real for real service. With a real for real service. With a real for real service. With a real sense of pride, you should sense of pride, you should sense of pride, you should sense of pride, you should dedicate yourself to doing dedicate yourself to doing dedicate yourself to doing dedicate yourself to doing an especially good job.an especially good job.an especially good job.an especially good job. If you have never before served on the Supervisory Committee, you may not yet be

R&R: Supervisory Committee

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aware of the full importance of your assignment. You and the other members of the committee provide the only practical way that the membership can check the reports received from the elected directors. To get a full understanding of your To get a full understanding of your To get a full understanding of your To get a full understanding of your role and role and role and role and responsibilities register for responsibilities register for responsibilities register for responsibilities register for the 2the 2the 2the 2----day Workshop organized by the day Workshop organized by the day Workshop organized by the day Workshop organized by the

League. League. League. League. www.barbadoscoopleague.orgwww.barbadoscoopleague.orgwww.barbadoscoopleague.orgwww.barbadoscoopleague.org

As you carry out your duties, you may be called upon to reveal a loss of co-operative funds; you may even be called upon to point out dishonest employees or officials. More than likely, however, you will report that you have carefully checked the records and assets and have found the affairs of the co-operative in good and proper order. Whatever the findings of your report you help strengthen the co-operative.

ResponsibilitiesResponsibilitiesResponsibilitiesResponsibilities The Committee shall: I.I.I.I. examine the books of the co-

operative; II.II.II.II. confirm cash instruments, property

and securities III.III.III.III. confirm deposits of members; IV.IV.IV.IV. appraise the policies and operating

procedures of the society and make recommendations to the board and to credit committee;

V.V.V.V. attest to the monthly returns filed with the Regulator; VI.VI.VI.VI. receive and investigate any

complaints made by members of the society about the management of the society;

VII.VII.VII.VII. monitor the management of the society; VIII.VIII.VIII.VIII. ensure that the society complies with

the provisions of the Act, regulations and by-laws; and

IX. verify the assets of the society and

monitor whether the assets are properly protected.

The Supervisory Committee must know:

♦ The Co-operative Society Act ♦ The Financial Services Act ♦ The national Rules and

Regulations governing CU Operations

♦ the By-laws of the Co-operative ♦ the policies of the co-operative ♦ acceptable and sound practices

R&R: Supervisory Committee Continued

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Keeping It Simple: Money Grows In Credit Unions

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The Employment Rights Act The Employment Rights Act The Employment Rights Act The Employment Rights Act (ERA) and its Impact on Credit (ERA) and its Impact on Credit (ERA) and its Impact on Credit (ERA) and its Impact on Credit UnionsUnionsUnionsUnions As you are aware the ERA 2012 has been in circulation since May 2012 and was subsequently proclaimed on Monday 15 proclaimed on Monday 15 proclaimed on Monday 15 proclaimed on Monday 15 April 2013April 2013April 2013April 2013. Your League was happy to host the ERA Awareness session in February under the title “The Employment Rights Act What You The Employment Rights Act What You The Employment Rights Act What You The Employment Rights Act What You Need to Know”Need to Know”Need to Know”Need to Know” to assist you with understanding what the ERA was all about and how it could potentially affect the way in which you conduct your employment function. We were indeed happy to have former Minister of Labour Mr. Arni Walters facilitate this session where he highlighted the duties that Credit Unions would now have or continue to have in place to ensure that they comply with the ERA. Some of the fundamental rights and duties noted were

i. Credit Unions have the right to determine control our employee’s work activities and the duty to clearly communicate these work activities and employment particulars to our employees in writing. Clear StatemeStatemeStatemeStatement of nt of nt of nt of ParticularsParticularsParticularsParticulars////CCCCoooonnnnttttrrrraaaaccccttttssss////Job Job Job Job

DescriptionsDescriptionsDescriptionsDescriptions are needed to ensure that employees have a full understanding of the functions that they have been hired to perform and what are the agreed terms under which the employment will occur.

ii. Credit Unions have the right to

discipline and/or terminate an employee’s contract “fairly” using the provision of the ERA and the disciplinary procedures set out in the Statement of Particulars. We have the duty to notify our employees in writing of the disciplinary procedures that form a part of our terms of employment. Our policies need to be written in an employee handbookemployee handbookemployee handbookemployee handbook and employees need to be given an opportunity to review the handbook, confirm that they understand that it forms part of the terms and conditions of their employment and sign that they agree to abide by the policies and procedures outlined within.

iii. Credit Unions have the right to

hear and address complaints and grievances of employees who may be affected by the working conditions. It is our

The Employment Rights Act and Its Impact on Credit Unions

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duty to document said grievances/complaints and take the necessary steps to resolve the issues highlighted in a timely manner.

iv. Credit Unions have the duty to

pay wages and salaries once the employee has performed his/her work. Having communicated the pay date, and method in our Statement of Particulars we need to ensure that we are adhering to what we would have agreed. It is essential for Credit Unions to provide all employees with Pay SlipsPay SlipsPay SlipsPay Slips which clearly show Gross Salary, Deductions and the Net Salary so that they can verify that they have been paid as agreed. As a reminder, you have a duty to deduct statutory (NIS and PAYE) contributions from the employee wages/salaries.

v. Credit Union Employers have a

duty to cooperate with and treat all employees fairly fairly fairly fairly and reasonably. Often we have heard the statement “life is not fair”, you League is advising you that your Employment Practices must be fair.

vi. We should be operating in an environment with mutual trust and confidence and we should be providing proper information to our employees.

vii. A duty of care relating to the safety and health of the employee and to take reasonable care of the employee.

It should be noted that failure to perform your duties as an employer can lead to constructive dismissal. The ERA notes that an Employer’s behaviour may lead to “Constructive Dismissal”. Some circumstances noted are improper or abusive language by the employer, failure to allow reasonable access to the grievance procedure, refusal to investigate a health and safety complaint especially in the case of injury, failure to pay increases where other employees have been awarded increases not connected to job performance etc. The League advises all members to review the ERA 2012 to ensure that they understand all of their rights and duties under the ERA and are in compliance with all of the requirements. Should you require assistance please feel free to contact us mmarshall@barbadoscoopleague.org

THE ERA and Its Impact on Credit Unions continued

Barbados CoUnion League Ltd.

1st Floor, Co-operators General Insurance Building

Barbados Co-operative & Credit Union League Ltd. has a new home

operators General Insurance BuildingUpper Collymore Rock

St. Michael

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operative & Credit

operators General Insurance Building