Enforcement Actions Increase 30 Percent in First Quarter

NEW HAVEN, Conn., April 15, 2015 (GLOBE NEWSWIRE) -- Enforcement actions rose by a startling 30 percent in the first quarter of 2015, as regulators cracked down on non-compliant financial institutions, according to the Q1 2015 Banking Compliance Index (BCI).

The index, compiled and analyzed by experts at the Regulatory Operations Center™, found that 176 enforcement actions were issued against banks and credit unions in the first quarter, a 30 percent 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.

"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 ten other significant regulatory proposals are in the pipeline.

"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."

Perdue noted that the right compliance management system (CMS) can help community banks better weather regulatory changes. The use of a CMS has actually been a regulator expectation since 1995.

"For nearly 20 years, regulators have asked banks to have a CMS," Perdue said. "For institutions who haven't gotten on board yet, it's time."

About the Banking Compliance Index

The Banking Compliance Index (BCI) is a quarterly tracking index published by the Regulatory Operations Center™. It measures the incremental cost burden on financial institutions to keep up with regulatory changes.

The BCI is calculated each quarter using a multivariate analysis that can be weighted across different contexts and is calibrated to determine the regulatory impact on financial institutions of varying sizes, product mixes, and regulatory oversight. The BCI uses key indicators including volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and supervision and the enforcement climate. The BCI data sources include: CFPB, FDIC, FED, NCUA and OCC. The BCI is calculated using an average size institution of $350 million.

The BCI tracks:

  • Regulatory Changes: A total count of applicable financial regulatory changes throughout the quarter.
  • Page Volume: The number of pages associated with each of the regulatory changes—indicative of the complexity and workload involved with reviewing and interpreting each change.
  • Enforcement Action Information (EA): Analysis of the public enforcement actions that have been issued during a quarter.
  • The BCI employs a data-driven approach to provide unique insights into the depth and breadth of regulatory compliance workload impact measured in terms of a Full-time Employee (FTE) Consumption Score.

Over 1000 financial institution professionals registered for the Continuity RegAdvisor Quarterly Briefing webcast Thursday, April 9th. During this session, regulatory expert Pam Perdue reviewed the Q1 2015 BCI metrics and provided in-depth information on the quarter's regulatory changes, a workload assessment of these changes and the required actions to avoid penalties. A recording of this session is available at http://info.continuity.net/q4-2015-regulatory-compliance-briefing-webinar-recording.

About Continuity

Continuity provides the only Compliance Core™ for community financial institutions. The Compliance Core is based on the regulator CMS framework and is engineered to reduce compliance risk and cost by bringing together strategic planning, technical execution and world-class insight into a single, subscription-based solution. These services are delivered using a compliance control platform that is continuously updated with the latest regulatory data from Washington, and best practice compliance processes from other Compliance Core institutions. Built by bankers and former examiners, Continuity's cutting-edge technology and expert personalized service help financial institutions quickly adapt to regulatory change, streamline the workload and ensure compliance. Continuity is headquartered in New Haven, CT and serves nearly 200 institutions in more than 40 states. For more information about Continuity, visit www.continuity.net.

CONTACT: Sarah Eigner www.csg-pr.com 720-726-5454 seigner@csg-pr.com

Source: Continuity