Regulatory compliance is becoming increasingly stringent, particularly for institutions under the supervision of the Consumer Financial Protection Bureau (CFPB) and state regulators. The CFPB mandates that all supervised entities, including banks and non-depository financial services companies, develop and maintain a robust Compliance Management System (CMS) that ensures adherence to federal consumer financial laws. This CMS is essential for establishing compliance responsibilities, communicating them to employees, and integrating them into business processes. Recently, state regulators have begun to adopt similar rigorous examination procedures, requesting copies of CMS from licensees during examinations. This shift has transformed state examinations from simple inquiries into extensive assessments that require detailed documentation of compliance practices across various operational areas. Institutions that lack a comprehensive CMS may face significant deficiencies during these examinations. Therefore, it is crucial for organizations to proactively develop a sound CMS rather than waiting for regulatory demands, as rushing to comply can lead to oversights and increased scrutiny from regulators.
Read the full article here.