Regulatory Enforcement Climate Cools; New Regs Still Pose Challenges

NEW HAVEN, Conn., July 20, 2016 (GLOBE NEWSWIRE) -- After levying record numbers of enforcement actions against financial institutions (FIs) in recent quarters, regulators eased enforcement activity slightly in 2016’s second quarter.

The Banking Compliance Index (BCI), compiled by experts at Continuity’s Regulatory Operations Center® (ROC) to measure and analyze the volume of regulatory change impacting financial institutions shows that regulatory agencies issued 150 enforcement actions against FIs last quarter, amounting to an enforcement rate of 9.80%.

The BCI, established in 2012, has not tracked an enforcement rate below 10% since Q4 2014’s 8.2%. As recently as Q2 2015, the BCI tracked the highest enforcement rate to date at 12.9%.

“Many of the enforcement actions levied against banks and credit unions in Q2 stem from longstanding regulations, including Bank Secrecy Act, call report filing, Safety & Soundness and other violations,” explained Donna Cameron, Continuity’s Director of Regulatory I/O.

In addition, since Q4 2014, the BCI has tracked as many as 125 regulatory changes in a single quarter and as few as 61, indicative of the regulatory volatility with which today’s FIs must cope.

“It’s increasingly difficult for banks and credit unions to handle regulatory change in such an unpredictable environment,” said Pam Perdue, EVP and Chief Regulatory Officer at Continuity. “The resources needed to manage new regulatory changes, to say nothing of those required to prevent or respond to enforcement actions, have fluctuated by tens of thousands of dollars per institution per quarter over the past year.”

Community FIs are still the hardest hit. They needed more than one full-time employee to process and comply with the 70 new regulatory changes introduced in the second quarter. These new regulatory changes were also heftier, with a greater than 86% increase in page count from Q1’s regulatory changes.

“Although enforcement activity may have slowed this quarter, most institutions are still playing catch up and struggling to cope with the high volume and velocity of regulatory change,” added Perdue.

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. Using 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.

  • 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.

Nearly 950 financial institution professionals registered for the Continuity RegAdvisor® Quarterly Briefing webcast on Thursday, July 14th. During this session, regulatory experts Pam Perdue and Donna Cameron reviewed the Q2 2016 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 here.

About Continuity

Continuity is a leading provider of Regulatory Technology (RegTech) solutions that automate compliance management for financial institutions of all sizes. By combining regulatory expertise and cloud technology, Continuity provides a proven way to reduce regulatory burden and mitigate compliance risk at a fraction of the cost. Our solutions are designed to automate all aspects of compliance management, from interpretation of regulatory issuances through intuitive task delegation, vendor management, and board reporting. Continuity serves hundreds of institutions across 40 states. Visit

Ian Toner 720-726-5460

Source: Continuity