Six Reasons you Should be Thanking your Compliance Staff Today!

We recently came across a somewhat dated article highlighting a number of admirable reasons for community bank CEOs to offer thanks to their Compliance Officers. Among these included:

  • Developing and maintaining the bank’s compliance policy and procedure documents;
  • Conducting risk assessments that accurately identify compliance risks facing the bank;
  • Performing difficult compliance reviews that often produce contentious findings;
  • Offering understandable support and explanation for the conclusions of those reviews;
  • Managing the compliance training process; and,
  • Staying up to speed on ever-changing compliance regulations.

The last item on the list though, seems by far the most important – giving thanks to the Compliance Officer for their day-to-day leadership in what has widely been viewed as a pretty unpopular role.

The compliance function has until recently been viewed in large measure as a necessary evil, an expense item whose purpose was to keep the bank from running afoul of intrusive technical regulatory requirements. But with the advent of increasing compliance requirements from well-known regulators and the establishment of the Consumer Financial Protection Bureau (CFPB), the importance of having a proactive, knowledgeable and empowered compliance staff is not only critical to the bank’s overall operation. . . it is now vital.

This has necessitated the compliance function being brought out of the proverbial shadows and into the limelight, where it can provide greater influence over how the bank conducts its day-to-day business. The compliance function should now have a seat at the table, where it can infuse the language and spirit of regulatory compliance into the organization’s operational DNA. Doing so, offers a compliance-based perspective for new products and services that are being developed / considered, which can help prevent unforeseen issues and establish a stronger up-front compliance preparation process.

We mentioned compliance’s historical position as not much more than an expense item at many banks. But think for a moment of the costs associated with non-compliance:

  • Operational disruption as adverse examination findings are dealt with;
  • Reduced productivity as resources are diverted from new business development and existing customer service to addressing problems;
  • Loss of confidence by employees in company leadership, resulting in higher employee turnover;
  • Increased training costs as deeper and lengthier explanations are required to instill needed concepts;
  • Reputational diminishment as customers and competitors invariably learn of the bank’s compliance problems; and,
  • Perhaps worst, fees and settlement costs associated with compliance failures.

And while there are countless other costs associated with non-compliance, when you place just these six counterweights on the scale, compliance costs might no longer seem so outrageous.

Compliance requirements aren’t going away. While they may be moderated in some respects from time to time, they are an inherent component of the business of community banking and in most respects add to the integrity of the banking business.

The time has come to recognize your Compliance Officer’s pivotal role in leading your bank into this new world where regulatory compliance is playing an increasingly critical component of your bank’s operational success. The banks that have already moved in this direction are demonstrating active preparation for future success and may well be gaining some degree of competitive advantage. You should think about joining them. And when you get a moment, remember to thank your compliance staff.

For more information please contact Greg Jones, Director of Regulatory Compliance Services at (404) 420-5997