June 10, 2011

 

 

Compliance Transformation Checklist

Some very progressive banks may be quite far down the road to a transformed approach to compliance. Some may have further to travel. This guide will help you see where your bank stands.

 

 

1. Is the compliance program approach proactive and strategic?
• Does compliance set strategic goals that align with the bank’s strategy?

• Are the primary duties of the Chief Compliance Officer tactical or strategic?

• Is watching for emerging consumer risks a primary goal of the compliance department? Is it in the job description of a senior compliance executive?

• Are emerging risks reported regularly to the senior management team?

• Is there a formal process for proactive planning for emerging risks?

• Is the compliance mission clearly linked to overall bank mission, strategy, and ethics standards?

 

 

 

2. Is the consumer compliance function integrated into the business units?
• Do heads of business lines take responsibility for fulfilling consumer protection regulations?

• Are written compliance procedures for all functions integrated into their business procedure counterparts?

• Do the heads of business lines participate in compliance-related meetings related to their areas?

• Are compliance subject matter experts embedded in the lines of business?

• Do consumer –facing personnel have a good grasp of consumer protection laws and consumer fairness principles that impact their jobs?

 

 

 

3. Are compensation and incentives properly aligned with fairness goals?
• Are elements of compensation based on treating customers fairly

• Do annual performance reviews for business-line heads factor compliance into evaluations and compensation?

• If bonuses and referral fees are paid for specific products, are fairness goals built in?

• Do compensation and bonus formulas include penalties for non-compliant behavior?

• Do job descriptions and performance evaluations include compliance and fairness-related elements?

• Does the human resources staff understand and support inclusion of both consumer compliance and fairness in job performance structures at all levels of the bank?

 

 

 

4. Is the compliance program efficient and leveraged?
• Are compliance procedures seamlessly built into the business processes?

• Do senior management and IT actively search for technology solutions to integrate compliance processes in an efficient manner?

• Are personnel within the lines of business expected to be compliance experts for their own job functions?

 

 

 

5.  Is compliance results-oriented?
• Are experts in metrics deployed to develop measurements for consumer fairness?

• Does the bank use metrics to measure all types of compliance-related results?

• Are compliance results tied to compensation and job promotion?

• Are compliance measurement results widely communicated to appropriate staff in the same way revenue metrics are communicated?

• Does the bank capture, centralize, and analyze all complaints for fairness issues?

• Are consumers surveyed regularly to test the bank’s performance in customer treatment?

 

 

 

6. Does the bank bring strong leadership to compliance?
• Does the bank’s CEO mention consumer fairness on a regular basis, both in large company meetings and in executive management sessions?

• Does the board of directors receive updates and training on consumer fairness issues?

• Is the board engaged with executive management on consumer fairness issues?

• Do the heads of the lines of business regularly engage with the Chief Compliance Officer?

 

 

 

7. Has the bank cultivated a compliance culture?
• Is consumer fairness built into the bank’s corporate messaging, including mission statements, statements of values, ethics policies, etc.?

• Does executive management talk about treating consumers fairly on a regular basis in bank meetings?

• Does company-wide communication routinely discuss consumer fairness issues?

• Are stories of how customers were well treated circulated often, including verbally during meetings and in written form in company internal communications?

• Do new employee materials explain the bank’s commitment to consumer fairness?

• Are compensation programs structured to reward those who are compliant with consumer laws (and the bank’s commitment to fairness) and to punish those who are not?

• Does company messaging in every form (newsletters, posters, brochures, image advertising, screen savers, etc.) convey the commitment to consumer fairness?

• Are consumer compliance and customer fairness considered when technology purchases are under consideration?

• Would employees say, when asked, that the bank’s commitment to treating customers fairly is a primary organization goal, and that their own supervisor considers it highly important?

 

 

The above material is one of a series of tools produced by Treliant Risk Advisors as a companion to the June 2011 ABA Banking Journal cover story, “Don’t get lost in UDAAP: How to find your way as regulators shift focus to Unfair Deceptive and Abusive Acts and Practices.”

 

To learn more, return to the compliance tools homepage.

 

[This report was posted on June 10, 2011 on the website of ABA Banking Journal, www.ababj.com, and is copyright 2011 by the American Bankers Association.]    

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