As we know, one challenge compliance professionals face each year is keeping up with regulatory changes. As part of our jobs, we must figure out what new rules have been passed and then make sure we implement any needed changes in our organizations.
That’s the core piece of regulatory change management in a financial institution.
But regulatory change management doesn’t stop there: compliance professionals must also be thinking ahead as to what future regulatory changes could be coming down the pike. That’s right, we are not only tasked with reading, understanding, and implementing final rules that are released, but we also must somehow try to figure out what could be coming in the future.
Reasons to Predict Compliance Changes This Year
So, why would we want to know what future changes are coming in the next year when we have plenty of things to focus on now? The answer is that there are several reasons why proactive regulatory change management is a good idea. Here are three:
Resources. First, it is important to know what changes may be in the future as we may need additional resources. For example, the CFPB recently proposed to amend Regulation B to implement a small business lending data collection and reporting requirement. The reality is that this “HMDA for small business loans” rule is going to be so much of a burden, that some financial institutions are going to need to create entire departments to handle this new rule. Some changes are really big, and that means more resources are needed.
Culture Change. Secondly, it is important to know what regulatory changes are coming so that you can determine what changes in your organization's culture may need to occur. For example, the CFPB’s proposed Regulation B changes are going to be a massive change - a shock, really - for commercial lenders who now will have to comply with a very complex and detailed regulation. You should fully expect frustration, resistance, errors, and probably, anger, directed at the person in your organization who is responsible for implementing the new Reg B data collection and reporting rule. Therefore, it makes since to proactively start working to manage the inevitable change that is coming for your commercial lenders. This means talking with Senior Management and possibly even providing an executive summary to the entire lending department of the impending change and how it will likely apply to your organization. This change is going to be hard, but working now to manage the change will help your future implementation efforts.
Knowledge Base. When a new rule is coming in the future, there are often things that can be done to start preparing to implement the change - such as building a knowledge base on the upcoming change. A knowledge base can be built in a number of ways depending on the change, such as reading the proposal and other agency information, or learning how a similar rule works. For example, the CFPB’s proposal to amend Regulation B is going to be built on a “HMDA Framework” which means that having a HMDA knowledge base will help your organization to implement the new Reg B rule.
6 Ways to Identify Upcoming Banking Compliance Changes
While the reasons listed above probably make sense to anyone reading this and we can all agree with the benefits of proactive regulatory change management, these reasons don't actually help anyone in identifying upcoming compliance changes. Therefore, we have put together a quick list of things we have done over the years when trying to discover future regulatory changes that could be coming over the next year or so.
Here are six things we have done to proactively try to identify possible upcoming compliance changes:
Subscribe to Agency updates. Most of the regulatory agencies provide various publications to keep financial institutions informed of their regulatory priorities. For example, the FDIC has long published their “Supervisory Insights,” the OCC publishes a Semi-Annual Risk Perspective, and the CFPB published a regular Supervisory Highlights.
Read Agency Speeches. Most agencies will release speeches given by their leadership teams. These speeches often highlight current initiatives and other things an agency is focusing its efforts toward achieving.
Review requests for information. When regulators are working on a new rule, guidance, or regulation, one of the first things they often do is request information on a topic. This could be done by holding a symposium or forum, or by issuing a formal request for information. These requests of information on a certain topic are often some of the first signs that regulators may be working on a rule in a particular area.
Follow the Unified Regulatory Agenda. Twice a year, the CFPB is required to release their regulatory agenda as part of the larger unified regulatory agenda, which requires federal agencies to provide information about regulations under development.
Read proposals and final rules. While proposals and final rules typically relate to a rule that is being issued, they will occasionally reference an upcoming rule or explain how they plan to address a particular topic in the future.
Let someone else do it for you. Sometimes, there just isn’t enough time in the day to sort through everything we should in order to keep up with possible compliance changes that could happen in the future. Therefore, its sometimes just easier to have someone else do it for you. Sometimes, this might be assigning an employee to this task, while other times it may be purchasing a webinar or training program to essentially “outsource” the function of gathering this information and saving your organization a fair amount of time.
Discovering Banking Compliance Changes in 2022
Now, this topic is close to our hearts here at the Compliance Cohort, as we are consistently watching for regulatory changes and often trying to determine what changes may be happening in the coming months. In fact, we have a Quarterly Compliance Update program in our store where we regularly cover all of the compliance changes that took place in the prior quarter. This program is a great way for compliance professionals in banks and credit unions to stay up-to-date on regulatory compliance changes that happen throughout the year. To view our most recent Quarterly Compliance Update, visit our store at:
Regardless of how you do it, being proactive to identify future compliance changes can give financial institutions a head start when it comes time to implement new compliance rules and regulations.