Why it's Important to Have an Effective Compliance Management System in Place

Abstract

Never before has regulatory compliance been a more important part of your business. Since the financial crisis of 2008, regulations like the Dodd-Frank Act have not only raised the compliance bar for lending organizations; they have made lenders materially responsible for compliance of their suppliers. The Consumer Financial Protection Bureau (CFPB), established to regulate financial institutions, has defined what it considers best compliance practices. It has released a long list of publications on compliance and risk, and how they should be managed effectively by today’s lending organizations. When their auditors pay you a visit, they will be looking for systematic and effective compliance framework within your organization. Although these guidelines refer to a “Compliance Management System (CMS),” they are vague as to what it should look like. In most organizations, the CMS is a combination of people, technology, and workflow. Whatever the configuration, guidelines are clear on what the product needs to be: rigorous and visible compliance with financial industry regulations.