NEW HAVEN, Conn.– After issuing fewer than 80 regulatory changes in each of the first three quarters of 2016, financial regulators concluded 2016 by introducing 115 regulatory changes in the fourth quarter, according to a new analysis.
These changes were spelled out across 6,057 pages that required financial institution employees over 800 hours to process, according to The Banking Compliance Index (BCI), compiled by Continuity’s Regulatory Operations Center (ROC). The ROC seeks to measure and analyze the volume of regulatory change and enforcement impacting financial institutions, shows that the average financial institution needed more than two full-time employees just to manage regulatory changes from the last quarter.
All told, Continuity’s ROC reported, the cost burden of these changes totaled a little over $53,000 for a typical community financial institution.
Since Q1 2013, the BCI has tracked roughly 3,300 pages of regulatory changes per quarter. Two specific issuances, related to mortgage servicing and prepaid accounts, accounted for roughly 2,600 pages of Q4 2016’s regulatory changes, the company said.
In addition, the enforcement climate warmed after last quarter’s uncharacteristic cooling. Regulatory bodies levied 116 enforcement actions in Q4 2016, with an average of nine items inside each action, Continuity reported.
“Regulators have publicly indicated their renewed focus on reviewing institutions’ compensation practices, especially in the area of sales incentives offered to employees,” explained Continuity Director of Regulatory I/O Donna Cameron. “The national conversation around major banks’ compensation practices spurred regulators to make compensation a focal point in last quarter’s enforcement decisions. “With the new compliance rating system announced in November, examiners have signaled that they will concentrate less on technical, issue-specific compliance,” added Cameron. “They expect to see standardized policies and procedures in place for evaluating and addressing regulatory change and managing compliance. Financial institutions need to accept that compliance has become everyone’s responsibility.”