NEW HAVEN, Conn.—Enforcement actions rose by a startling 30% in the first quarter of 2015, as regulators cracked down on non-compliant financial institutions, according to Continuity’s Q1 2015 Banking Compliance Index (BCI).
The index, compiled and analyzed by the Regulatory Operations Center, found that 176 enforcement actions were issued against banks and credit unions in the first quarter, a 30% increase over the fourth quarter of 2014.
Additionally, the average community financial institution needed to devote an additional $30,988 and 331 hours—or the equivalent of 1.35 full-time employees—to manage just the new regulatory changes introduced in the first quarter, Continuity said.
"There's no singular reason for the spike in enforcement actions last quarter; it's simply the regulatory environment we're operating in these days," said Pam Perdue, executive vice president of regulatory operations at Continuity. "For institutions that haven't yet found a proper way to manage compliance, the risk of costly enforcement actions remains high."
The first quarter saw a slower increase in the number of regulatory changes, hours, and funds required to implement them, but those numbers will likely rise again as the year continues, Perdue said. Changes to the Home Mortgage Disclosure Act are expected this summer, and at least 10 other significant regulatory proposals are in the pipeline, the company noted.
"This is definitely not a time to pop the cork on the champagne," Perdue said. "We're seeing a lot of proposals right now, and those will become final rules eventually. Additionally, banks still must continue to comply with the 14,209 lines of existing regulations out there. Nothing about the regulatory process right now is easy, and that's not likely to change soon."