Compliance Best Practices


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There is a steady and constant change in regulatory environments that comes with compliance issues. Therefore, best practices have become an important aspect governing how regulators, consultants and community bankers perform their day-to-day tasks. To some extent, coping with the speed at which these changes are taking place becomes difficult to manage. This is mainly because of failure in compliance best practices.

Here is some advice from a standard regulator – the FDIC (Federal Deposit Insurance Corporation) to help banks evaluate, review and improve their business operations. These five suggestions include:

1.     Evaluation of Obedience

This ensures best practices in fair lending, fulfillment of risk management and efficient services in banks. Through evaluation of obedience and competitiveness, a proper program can be developed.

2.     Reviewing Industry Trends

There is need to review and adopt emerging industry trends that ensure standard practices in consumer protection. There is need for special attention on bank regulations and policies based on public comments about bank services.

3.     Monitor Social Media and Internet

Comments about services and reviews serve as an insight into customer satisfaction. On social media, the bank’s reputation is the key to success. Therefore, the challenge is to maintain good practices to protect the bank’s reputation over the internet.

4.     Maintain Consumer Complaint System

Appropriate personnel in the bank must review and investigate consumer complaints. The findings must be reported to senior management personnel who can take the appropriate action.

5.     Support for Effective Observance

There must be support for audit functions that identify risks. The system must be capable of dealing with the complexity and magnitude of the risk. It must have intensity and frequency to match the need of obedience with policies and regulations. Audit functions will include practices like: documentation of reviews, management of reporting and continuous monitoring systems which ensure corrective action.

According to the FDIC, it seems community banks are faring well with an intensive regulatory environment. They have maintained consistency in compliance management and maintaining their responsibilities effectively.

Based on these observations made by the FDIC, community banks provide a lead for regulators on what is required as best practices. These practices are meant to be offered by federal regulators, professionals and consultants. The recommended practices highlight the importance of consensus, communication and coordination.

Challenges for Community Banks

  1. Community banks must create a compliance culture: Through internal compliance committee banks can incorporate best practices that become a culture.
  2. Monitor Employees’ Acquiescence with Policies: The updates on conformity with regulations must be monitored. Reports on performance must facilitate accountability by employees.
  3. Staff Training: Making sure that the staff is trained is important.
  4. Ensuring Consistency: Reviewing what is acceptable and ensuring that terms and policies are regulated can be very challenging.
  5. Risk Management: Banks must determine if the right people are handling risk management or not.

These are only a few key compliance best practices for banks. There are many more that are constantly changing.

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