I was talking with a Chief Compliance Officer the other day who said they were finding it very hard to build and maintain their compliance testing program. This isn’t the first time I’ve heard similar concerns. It always comes down to resources – people, time, budget, and competing priorities for all of the above. I’ve been there and experienced the same thing first-hand – making a business case for why I need more money to hire more people, to maintain various elements of my compliance program. Ultimately, the question should not be “how can we afford to do this?”; the question really should be – “how can you afford not to…?”
My teenage son recently came to me asking for money to purchase something (a common occurrence these days – this boy has expensive taste and what seems like a new request for funding every week). When I asked him how much he was looking for me to invest in this latest endeavor, he didn’t lead his answer with how much it was going to cost me; he led with how much I would be saving in the long run.
Ironically, I could apply the same logic for justifying the cost of a compliance testing program. Yes, establishing a sustainable compliance testing program and staffing it with well-qualified, attention-to-detail compliance experts is not an easy task. It’s a very labor-intensive endeavor. However, think of how valuable it is to proactively self-identify compliance breakdowns before your internal auditors or, even worse, regulators uncover those issues. Think about the competitive advantage this investment could bring to your bank as you ensure your bank is adhering to consumer protection requirements as well as internal bank policies and procedures.
After all, early identification of areas of non-compliance and the ability to take corrective action before a regulatory agency becomes involved, can ultimately lead to significant cost savings by avoiding/minimizing costly fines, expensive business disruptions, customer service break-downs, customer restitution, and/or reputation impacts. When making a business case for why it’s so important to establish a compliance testing program, commensurate with your bank’s size, complexity, and risk profile of course, it’s important to remember the cost of non-compliance will likely be much costlier than establishing and maintaining a testing program to proactively identify deficiencies.
As you reflect on your existing compliance testing program and evaluate its effectiveness, here are some common pitfalls to avoid:
So, remember, don’t get overwhelmed by the amount of effort that goes into maintaining an effective compliance testing program. Instead, draw your attention to all the time and hassle you are ultimately saving yourself and your bank. If you need help, Spinnaker’s experienced team of compliance professionals can assist with:
The Big Picture How good are you at listening? I mean really listening? I thought I was good listener. After all, on top of my well-intended impatience and confidence, I was sure I already had the answers and didn’t need to listen any closer. I was nodding, smiling and solving the problem I perceived to be at hand.
Data & Analytics, Change Management, Compliance 2 minute read
Every year, tens of thousands of pages are published in the Federal Register, with a good chunk of themdetailing what banks need to deliver in serving their customers. In the past decade, the Dodd-Frank Wall Street Reform and Consumer Protection Act came in at the equivalent of nearly 1,000 pages and prompted several thousand more pages of rules and regulations, including, as just one example, the TILA-RESPA Integrated Disclosure (TRID) rules. Tack on relatedregulations published as a result of the Dodd-Frank Act,other more recent regulatory amendments likethose made to the Fair Debt Collection Practices Act (FDCPA), as well as state-specific requirements, and you’ve got enough paperwork to fill a library.
Risk Management & Regulatory Compliance, Compliance, Operational Efficiency 6 minute read
The Big Picture In today’s heightened regulatory environment, it’s hard to imagine that just a decade ago, banks handed over charged-off accounts to outside recoveries agencies without much thought. After all, the bad debt had been written off and the banks had already invested considerable resources during the collections process trying to get those customers reestablished.
Customer Channels & Operations Management, Data & Analytics, Risk Management & Regulatory Compliance 6 minute read
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