VIDEO: Compliance Management Systems
In this Compliance Clip (video), Adam provides an overview of what should be included in a financial institution’s compliance management system (CMS). In addition, Adam explains what a CMS should do within an organization and also provides more resources for those who are interested.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about Compliance Management Systems. Compliance Management Systems are an essential function in your organization, especially when it comes to your compliance examinations with your federal regulators. There are a number of things that are included in a Compliance Management System. Now, each regulator has a little bit different language for what they include, but generally there are three main elements of a Compliance Management System. There are some sub components that we'll discuss here.
The first element is, of course, board and management oversight. Basically, you have to have somebody at the top that is setting the stage for compliance or you're going to have a challenge when it comes to managing your compliance program in your organization. The first component of a Compliance Management System is setting the tone, setting the stage and having a “Chief Vision Compliance Officer”, somebody who's setting the vision for compliance and being that chief vision officer for compliance in your organization.
The second element of a Compliance Management System then, of course, is having a compliance program. A compliance program is all your processes and procedures related to regulatory and consumer compliance. Things like policies and procedures, your training, your monitoring and your audit and how you respond to consumer complaints and how you manage those complaints. This is your compliance program. So compliance programs are really just one of three main elements in your Compliance Management System, which is the larger piece that your regulators look at when they come in and examine your organization.
The third component is something that's been added over the last decade. It's been something that's been evolving for, I don't know, three, five years, maybe a little bit longer, but it's really now come where it is its own element of Compliance Management System, and this is something that the examiners look long and hard on because several years ago, this wasn't an element in Compliance Management Systems. So this is something that is fairly new and what this final component is, is service provider oversight. Now we're not talking about vendor management per se, because your organization does have to have a vendor management program that is outlined and what you have to do in some IT booklets established by the FFIEC. What we're talking about here is managing your service providers and those third parties from the consumer protection perspective. So, basically, which of your third party providers can touch and communicate and talk to your consumers. And those service providers need to be managed in a way to make sure that you don't have issues, because if you don't, you can end up with all kinds of violations. It could be for lending violations, it could be UDAAP violations, violations of certain disclosures and laws. That is why it is pertinent that your organization has in your Compliance Management System a way to manage your service providers and those third parties that deal with consumer protection or could touch and correspond with your consumers. Things like complaints. If they receive complaints, do you get those complaints back, what's built in your contracts? So a lot of things go into that component.
Those are the three main elements of a Compliance Management System. Now, what does a Compliance Management System do? What's it supposed to accomplish? Well, it is how an institution establishes its compliance responsibilities. It's also how your organization communicates those responsibilities to your employees. It's how you ensure responsibilities are incorporated into your business processes. It's how you review operations to ensure responsibilities are carried out and legal requirements are met. And it's also how you take corrective action. So this sums up what your Compliance Management System is supposed to do in your organization.
For those of you who are interested in diving deeper into Compliance Management Systems, we actually have a full-length program on Compliance Management Systems available in our store. Now, I will say that this program is also included in our premium memberships. We have a premium membership that we offer a couple of times a year. We offer it in January and we're going to offer it here in July, late June, early July. What this does is it provides you with your quarterly compliance updates so that you can keep apprised of everything that's going on in the compliance world. But both of our premium memberships include access to our Compliance Management Systems class. So if you're interested in going further Compliance Management Systems, take a look at that. If you're interested in how you manage regulatory changes, which is a key piece that your examiners are looking at to make sure that you have a process to keep up with regulatory changes, you can take a look at our Quarterly Compliance Update program. Those are available in both of our premium memberships. Our Quarterly Compliance Update program includes all the information that you need to know about what happened in the prior quarter. And if you sign up for the premium membership, you're going to get four of those quarterly programs so that you cover everything through an entire year. Those programs, of course, come with a training video, just like this. They come with a comprehensive manual and a certificate of completion is available upon request for each purchase of the program. So anyone who enrolls, you have access to get one certificate of completion. So it's available for you. Hopefully you'll take a look at that. If you're waiting on a premium membership, it should be coming in late June, early July. And that should be enough for you there.
So that's all I have for you today in this Compliance Clip. I hope you have a wonderful day.