Why outsourcing regulatory compliance functions is a SMART move!
Written by: Rob Ellis, Senior Compliance Consultant
Regulatory compliance is getting more and more complex (and more expensive) every year. Attracting and keeping qualified compliance staff is also becoming more complicated and expensive. Many regulated Financial Institutions and their compliance departments can face resource challenges in both capacity and expertise. As a result, there’s a growing trend for Financial Institutions to outsource all or part of their compliance function and are actively outsourcing certain elements of their Compliance Management System (CMS).
The outsourcing of Compliance Monitoring brings multiple benefits to an institution. It is:
Independent, Knowledgeable, and Objective. Utilization of an independent third-party team of deep subject matter experts and specialist compliance professionals proves to examiners that the institution is serious and invested in compliance.
Cost-Effective. It cuts out full-time position(s) of overworked internal compliance position or analyst and decreases overall risk of fines/damages, with a lower initial investment.
An up-to-date industry-wide subject matter expertise perspective. You get access to industry leading best practices.
Financial Institutions can save money, access specialist knowledge, and improve efficiency by outsourcing compliance functions to a third-party service provider. That’s a WIN-WIN-WIN!
Possible risks of not outsourcing compliance functions:
Many institutions have found that by 100% internally sourcing their compliance program, they were gambling their regulatory viability on one single, likely overworked, individual’s efforts, rather than utilizing a third-party team to conduct their compliance activities. Compliance officers already have extensive responsibilities, resulting in a compliance officer possibly lacking the time, knowledge, and skills to operate an effective compliance program, thus opening the organization up to the possibility of numerous regulatory violations.
Outsourcing compliance work can save time and money. It can free up in-house staff to focus on unique day to day business line objectives that require dedicated focused time. It can also be helpful if you need specialized knowledge right away and don’t have time to train your staff, for example when Auditors or Examiners detect regulatory issues that need corrective action quickly and effectively.
Some compliance functions that can easily be outsourced include:
Compliance monitoring,
Training,
Review of marketing materials,
Policy & Procedure development and review,
CRA and Fair Lending program management,
Awareness/communication of regulatory changes, and,
Much more…
You may look to outsource a specific area of weakness or that poses additional risk or concern, such as Flood, HMDA, CRA, Fair Lending, or any other of the myriad of regulations that require specialized knowledge.
By having a third-party compliance partner, you gain access to multiple compliance professionals with many years of combined regulatory compliance experience. This will ensure substantial issues are being identified and accurately addressed. In addition, you don’t need to worry about turnover hurting compliance because the work is being done by a fully staffed company instead of just one or two key individuals who could leave at any time.
With SCA as your compliance partner, you have the upside of all the outsourcing benefits, while adding confidence to your regulatory compliance process. We take pride in tailoring our services to our specific client’s needs. SCA is ready to assist in implementing the right solutions to ensure you are meeting all your consumer protection responsibilities.
What are you waiting for? To discuss how SCA can be your strategic partner and support you with your Compliance Monitoring or Consulting needs, please contact our Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617 and schedule a time to speak with us today.
