NEW HAVEN, Conn.—On the heels of what Continuity termed a “burdensome” fourth quarter in 2016, America’s financial institutions encountered fewer regulatory changes in Q1 2017 than any quarter in the nearly five-year history of the Banking Compliance Index (BCI).
Simultaneously, regulatory agencies issued just 57 enforcement actions (EAs) against financial institutions in the quarter, an unprecedented cooling, 64% below the average number of EAs per quarter dating back to Q1 2013 (157), according to the BCI, which is compiled by Continuity’s Regulatory Operations Center (ROC).
The goal of the BCI is to measure and analyze the volume of regulatory change and enforcement impacting financial institutions. It had never registered a BCI score below 1.0 since the index was first published in 2013.
“Q1’s historic .79 score indicated that the average financial institution needed less than one full-time employee to read, process and comply with the quarter’s regulatory changes,” the Continuity said. “Regulatory change has been limited by several related factors, including new leadership in the executive and legislative branches of government; unfilled leadership positions or soon-expiring leadership terms at agencies like the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency; and uncertainty about the fate or future purviews of specific agencies, like the Consumer Financial Protection Bureau.”
Continuity said that although the historic low BCI figures might indicate a regulatory respite to the untrained observer, America’s financial institutions are still “grappling with the uncertainty” emanating from Washington’s regulatory bodies.
“Financial institutions are nervous, and rightfully so,” explained Continuity EVP and Chief Regulatory Officer Pam Perdue in a statement. “It’s impossible for the average bank to clearly project compliance staffing costs when it needs to spend 809 hours complying with new regulatory changes in one quarter and just 222 in the next.”
According to Continuity, the Q1 2017 BCI tracked a nearly 75% decrease in hours the average institution needed to comply with the quarter’s regulatory changes.
“Looking back just one quarter to Q4 2016, the BCI counted a staggering 115 regulatory changes,” explained Continuity Director of Regulatory I/O Donna Cameron. “Many of last quarter’s regulatory changes have yet to go into effect, so despite the dip in regulatory change volume, many diligent compliance officials at financial institutions around the country are still working overtime to prepare for and comply with those and previous quarters’ changes.”