VIDEO: Banking Compliance Changes 2022
In this Compliance Clip (video), Adam gives practical insights on why you need to predict and anticipate banking compliance changes this year. He also provided ways to identify upcoming and possible banking compliance changes. This video is a valuable tool for compliance professionals who are in charge of regulatory change management.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about banking compliance changes in 2022, and really just discovering how do we pay attention to what might be coming down the pike as we look into the future of regulatory compliance changes.
I understand, first and foremost, that one challenge compliance professionals face is keeping up with regulatory change management. This is a very difficult thing for compliance professionals because things are changing so frequently. There are minor changes, major changes. The major ones are easy to hear about and difficult to keep up with because they're so complex, but there's so many minor things that go on on a weekly basis that sometimes it's difficult to keep up with it. What's really challenging is to try to be thinking ahead and thinking proactively as to what can be coming in the future. Because there are so many things that are happening now, that have happened in the past that we have to deal with, that sometimes it's hard to think about it in the future. Being proactive to identify future compliance changes can give you and your financial institution a head start when it comes to implementing new compliance rules and regulations. I believe it's very, very wise to be proactive when it comes to regulatory compliance changes, especially in some areas.
Reasons to Predict Compliance Changes
Why do we want to predict compliance changes? Well, there's a couple of reasons.
Resources
First and foremost, sometimes if you can predict a compliance change is coming, you can take a look at your resources and realize you need to enhance your resources or reallocate resources in order to start preparing for changes that are coming in the future. For example, the CFPB, in the fall of 2021, implemented a proposal. They released the proposal to amend Regulation B to implement a new rule that would require small business lending data collection and reporting. Basically, this would be HMDA for small businesses. This is a rule that's coming from the Dodd-Frank Act. It's something that's been in the works for a very long time. At the time of recording this, we're not seeing the final rule, but this is something we know that's coming for a very long time. If you can imagine implementing a brand new HMDA program in your organization, you can understand how big of a challenge this is going to be and how many resources you might need in order to do that. That's where looking ahead at what changes are possibly coming, and thinking in the future can really benefit you now. When it's time to implement the rule, you would probably need more resources for some of those rules that are coming down the pipe.
Culture Change
Also, if you look at that Regulation B change that would require small business lending data collection and reporting, in other words HMDA for small businesses, this is going to be a big change for commercial lenders because commercial lenders absolutely love regulatory compliance. They love to follow the rules. They love to pay attention to details, and they really like to make your job easy. I'm kidding! That's not the culture of the commercial lenders. Right or wrong, it's not commercial lender's job or salespeople that are going to go out and get business and bring them in. The last thing that they've thought about, traditionally, is regulatory compliance. In fact, I was talking to a commercial lender years ago and he said to me, “Oh, you’re compliance, yeah, that's why I make commercial lending because the compliance rules don't apply to me.” That's the mindset that some commercial lenders have. It's not correct and this is going to be a real awakening for them.
This new Regulation B amendment for the small business lending data collection and reporting, this HMDA for small business loans is going to be a huge, huge culture shift for your commercial loan officers and your commercial lending department. When you have a culture shift, that is that big, it's really important that you start talking about this now. The reality is you're going to be the bad guy. You're going to be the one that people are frustrated with, angry with, and you're going to be the one that gets yelled at if you're the one responsible for implementing this. That's a good reason to make somebody else implement it. Just saying. At the end of the day, if you start talking about this now and start explaining that this change is coming now, this can absolutely help you in the future because you can say, “Remember two years ago when I said this was coming?” Then you’ll at least be able to say that. And there's some other things you can do to manage culture changes.
Knowledge Base
Also what you can do is help to build a knowledge base. For example, on this same topic of Regulation B, the small business lending data collection and reporting requirements, this HMDA for small businesses, if you're not currently a HMDA reporter, you might want to consider building a knowledge base, because this new rule on Regulation B is actually using a HMDA framework. So if you have a HMDA framework and a HMDA knowledge base, it's going to be easier for you to implement this new rule than if you have no HMDA knowledge base in your organization. If you're not currently a HMDA reporter, it might be a good idea to start learning about HMDA and having a bit of a knowledge base when it comes time to implement the new rule. That way you're not starting from scratch. So these are reasons why it's important to be looking ahead for future compliance changes.
6 Ways to Identify Upcoming Banking Compliance Changes
How can you identify upcoming banking compliance changes, regulatory compliance changes? Well, there's a number of ways. I've done this in the past and the things that have worked well for me, the things I do today.
Subscribe to Agency updates.
Number one is you can subscribe to agency updates. All the agencies have email releases they send out. You can look at their press rooms and their blogs and all of that. You end up getting subscriptions to a dozen or more different places and you still don't get everything. But that is one way to do that.
Read Agency Speeches.
You can read agency speeches because the directors of these regulatory agencies, agencies like the FDIC, CFPB, so on and so forth, their leaders are often talking about what they're working on in the future and things that are coming down the pike. That is something you can do is look at the speeches that they talk about.
Review requests for information
You can review requests for information. The way the rulemaking process works is regulatory agencies often ask for information, they do this requests for information, they hold symposiums and forums trying to learn about certain topics. Well, when they're doing that, they're collecting information in the early stages of a potential rule. Sometimes it never comes to fruition, but those requests for information, a lot of times lead to an advanced notice of proposed rulemaking, then a proposed rule and then a final rule. Looking at those early stages of when they're requesting information, talking about things, having symposiums and forums, those are things that can tell us what might be coming in the future.
Follow the Unified Regulatory Agenda.
Something else we can do is follow the Unified Regulatory Agenda. The CFPB in particular releases their regulatory agenda twice a year. In this agenda, they talk about future actions, they talk about advanced notice of proposed rulemakings and things they’re working on in the future. That's something I'm always looking at, something I include in my quarterly compliance updates. So this is something I'm always looking at, but it's not something that we're always looking at because we don't always have time to do that.
Read proposals and final rules.
Another thing we can do is read proposals and final rules in entirety, because a lot of times proposals or final rules will say, this was a great question, we're not gonna address it in this rule, but we plan to release it in a future rule. So we can read proposals or final rules in entirety. Who doesn't have time for that? It's so easy to do. It's fun to do on the weekends, right? I hate to do that.
Let someone else do it for you.
Also what you can do is let somebody else do it for you. Essentially, I call this outsourcing. If you don't have time to read the proposals or final rules and follow the Unified Regulatory Agenda and review requests for information, and symposiums and forums, and read agency speeches and subscribe to agency updates, one thing you can do is just outsource that function. Frankly, when I was in banking, before I started getting (I call myself a compliance stalker) because now I like to stalk compliance rules and regulations and look to see what’s coming in the future, I did. I used to outsource regulatory updates to a company that would provide regular trainings. For the cost that I paid for them to tell me what had changed and what I needed to know, when I add up the hours of doing all of these things, there was a huge savings in order to do that. That's why some of the things that I do at the Compliance Cohort, one of them is our quarterly compliance updates, and the other is we’re releasing a new program, at the time of this recording called Forward Thinking 2022, where we're looking at how the Reg B proposal might affect your organization and other expected compliance changes for 2022. Those are some things that you could essentially outsource to us to get the fast track on all of these things, but you can, of course you can do all of these things. These are some things that you should follow if you're not outsourcing that another way.
If you're interested in our programs, they’re in our store at www.compliancecohort.com/store, but these are things that you can do on your own or in your organization to keep up with what potential changes may be coming down the pike in the future.
That's all I have for you in this Compliance Clip.