A Compliance Officer faces challenges on a daily basis. It is not only the Compliance Officer’s responsibility to maintain an effective Compliance Management System (CMS), but it also requires the support of the Bank’s Board of Directors, Senior Management, and bank staff to have a successful CMS.
The Federal Reserve System consumer compliance examiners have identified six common challenges confronting community bank compliance officers. These challenges can be more demanding for community bank compliance officers with other responsibilities other than compliance management. This article will outline these six common challenges.
1. Transition to the Consumer Compliance Role
Individuals beginning in a Compliance Officer role have a steep learning curve of understanding the various regulations and laws on consumer compliance and then implementing these into policies, procedures, and internal controls for an effective CMS for the Bank. The Board of Directors and Senior Management can assist in this process by clearly communicating to the organization that the Compliance Officer will be supported when performing compliance-related activities at the Bank. If the Compliance Officer has other responsibilities other than compliance-related activities, the Board of Directors and Senior Management must ensure adequate time is allocated and sufficient training and resources are provided for a successful CMS.
2. Obtain / Maintain Direct Access to Board of Directors and Management Committees
Contact with the Board of Directors and Senior Management should be ongoing. The Compliance Officer should understand the Bank’s governance structure. The approved communication plan should contain an appropriate agenda that strategically addresses the Bank’s risk appetite.
3. Track Regulatory Changes
A Compliance Officer must monitor legislative, regulatory, and supervisory changes. To accomplish this task, the Compliance Officer can subscribe to regulatory agencies’ notifications, consumer compliance services, and join support networks. In addition, banking associations provide compliance-related forums to discuss compliance issues.
4. Change the Compliance Culture in the Bank
This task may be one of the most important and may pose the most difficulty for a Compliance Officer. The Compliance Officer must be able to discuss the risks resulting from regulatory and environmental changes and communicate with staff members about their consumer compliance responsibilities. The Bank’s culture must be communicated from the Board of Directors and Senior Management down through the organization. The Compliance Officer cannot rely solely on this communication but must proactively provide the Board of Directors and staff with the consumer compliance issues and clearly communicate the nature of the problem and the necessary changes to be implemented.
5. Maintain a Successful CMS
A Compliance Officer maintaining a satisfactory CMS may need help to maintain resources for training and monitoring compliance issues. The Compliance Officer must be proactive in discussions with the Board of Directors that although the CMS is currently satisfactory, the Bank may not be keeping pace with the evolving regulatory or environmental changes as the Bank grows.
6. Expand Your Support System
In the ever-changing compliance environment, a Compliance Officer must develop an internal and external support network. A way to build an internal support network is to implement a compliance committee represented by each function in the Bank (i.e., lending, operations, marketing). A Compliance Officer can gain external support from other Compliance Officers from banks similar in asset size, products, or area. Also, State banking organizations put on conferences and often have support groups that compliance officers can attend.
The compliance landscape may be challenging to navigate; however, developing a strong relationship with the Board of Directors and staff will lead to a successful CMS program.
CCI is always here as a resource for your institution. Contact us for more information on how CCI can assist with any aspects of your CMS program.