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ComplianceFinanceMarch 16, 2021

Episode 18: Consumer compliance: Shift priorities to follow changes in regulatory oversight trends

Is your financial institution prepared for 2021’s regulatory compliance changes?

In our next podcast, “Consumer Compliance: Shift Priorities to Follow Changes in Regulatory Oversight Trends,” we focus on adapting to current and expected regulatory priorities and oversight measures.

Wolters Kluwer Vice President of Banking Compliance Solutions, Samir Agarwal, is joined by Tim Burniston, Senior Advisor, Regulatory Strategy with Wolters Kluwer, to offer guidance on fortifying compliance measures to prepare for the residual consumer impact of the pandemic, leadership changes in Washington, and an anticipated increase in regulatory change.

Topics discussed in this episode:

  • What does a post-pandemic and relief package operating environment look like?
  • What has caused the drop off in Lending discrimination referrals from the Banking regulators?
  • What are the major takeaways from the most recent extensive banking, regulatory, and Risk Indicator survey and some other themes that will carry into 2021?
...Over 40 percent...accelerating their...investment in the automation of regulatory change management processes.
...It correlates with the continued need to stay on top of the waves of regulation that have to be absorbed so quickly, especially when there are so many other things to do.
Tim Burniston, Senior Advisor, Regulatory Strategy with Wolters Kluwer

Podcast solution spotlights:


Greg Corombos, News Director at Radio America  00:06
Hi, I’m Greg Corombos. Welcome to Banking Compliance Insights, a podcast series from Wolters Kluwer. This series was created to deliver insights on compliance trends and strategies for navigating today’s regulatory and risk environments. Today’s episode, “Consumer Compliance: Shift Priorities to Follow Changes and Regulatory Oversight Trends,” focuses on strategies for adapting to both current and expected regulatory priorities and oversight measures. Here to lead our discussion on this subject is Wolters Kluwer Vice President of Banking Compliance Solutions, Samir Agarwal. He is joined by Tim Burniston, Senior Advisor of Regulatory Strategy with Wolters Kluwer. Samir, let me pass the conversation over to you.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  00:55
Thank you, Greg. It’s great to be back in the new year with our podcast. Today, we’re going to discuss regulatory change and compliance change. What does a post-pandemic and relief package operating environment look like? We invited Tim Burniston to help us frame and focus on what will likely matter most. Welcome, Tim. Can you tell us a little bit about your background and what do you do at Wolters Kluwer?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  01:18
Sure. Thanks for inviting me, Samir. I really appreciate having the opportunity to speak with our audience on today’s podcast. I’ve been with Wolters Kluwer about 10 years. I’ve had two roles in that time. First, as an executive leader for our Professional Services and Consulting Practice in the U.S., across the banking insurance and securities industries. I did that job for several years. Currently, I’m, as you mentioned, the Senior Advisor for Regulatory Strategy for Compliance Solutions business. It’s just, I would say, the best job anybody could have at Wolters Kluwer. I keep an eye on statutory developments from Congress, and regulatory and policy developments coming from the banking agencies. I monitor industry efforts to address those developments, maintain relationships with the regulators and industry trade groups, and most importantly, the part that I really enjoy most is trying to help our business leaders set strategy for how we can best meet the needs of our customers as regulatory change comes to fruition. Before I joined Wolters Kluwer, I served in the federal government and senior executive roles for about 35 years. I worked primarily on bank examination, supervision, and enforcement policy at the Fed. The former OTS, the FDIC, I also had the opportunity to lead a team of really amazing, talented colleagues that were all detailed to the Treasury Department to set up the Large Bank Supervision program for the CFPB. That was actually about 10 years ago. This is my seventh presidential transition and actually my eleventh administration change.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  02:58
Wow, that’s quite an impressive background, Tim. I’m so glad that you are the individual here helping us understand the world a little bit better. And you definitely have the pedigree behind you to help us navigate the future. So, here at Wolters Kluwer, I know we conduct an extensive Regulatory & Risk Management Indicator survey. What were the major takeaways from the most recent survey results? And then let’s touch on some other themes that will carry into 2021.
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  03:25
OK. 2020 was actually our eighth administration of the survey. We had more than 660 responses with a really great cross-section proportional to the asset size make up in the industry. Some of our listeners today may have actually taken the time to respond. We’d like to thank all of you who did so and hope you’ll do it again when we send out the 2021 survey this coming August. The survey collects trend information on banking and risk concerns and what’s on the minds and the desks of the respondents. We try to use the results to determine the real and expected impact of those issues and to assess the current state of risk management efforts across the industry.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  04:10
Who’s your target audience for reading the survey results?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  04:15
The target audience is internal to Wolters Kluwer as well as the industry itself. We make the results available right on our website to anyone who’d like to take a look at them. I think it’s helpful to primarily banks, credit unions, and others who took the time to respond to help them plan their next year’s business activities. As I mentioned, the survey was conducted in August and that was, of course, before the November elections. The key high-level observations from the survey findings continued to resonate in 2021. I’ll just throw out a few examples of some things that really carry forward. For example, in 2020, we actually noticed, surprisingly so, a slight easing of the level of compliance angst when compared to 2019, which tells us that there’s a little bit more confidence in the ability of the industry to maintain compliance. And that’s really a good thing because it tells us that even during the pandemic, which of course stressed all of us, compliance is remaining a high priority. But there’s still, I would say, a really high level of concern overall, especially about keeping current with regulatory change, which continued to rank very high in both the community bank and the large bank respondents, as did keeping compliance programs adequately staffed and functioning properly. Another observation is about 40 percent of the respondents told us that they perceived an increase in scrutiny of their fair lending exam programs during examinations. We’ve already felt the winds of change starting to blow from the CFPB and HUD, in particular, about the future. Next, we asked the respondents to tell us to what extent they are weighing economic, political, and environmental factors. It’s probably no surprise that pandemic risk management was at the top of the list with 86 percent of the respondents giving consideration. Also, at the top of that list was loan default risk at 85 percent. Keep in mind, credit risk is something that regulators are paying attention to as well. One other factor I’ll mention today was that a high degree of consideration was being given to business risk and adaptability at 79 percent. And as we continue to manage through the pandemic, both personally and professionally, those concerns are very well justified. With regard to future investments, we had over 40 percent telling us that they anticipate accelerating their institutions’ investment in the automation of regulatory change management processes. That’s a pretty high figure, but it correlates with the continued need to stay on top of the waves of regulation that have to be absorbed so quickly, especially when there are so many other things to do. And finally, we asked our respondents about what they see as prospects for reduced regulatory burden over the next two years. Fifty-six percent told us they believe burden reduction was unlikely. That seems about right. It certainly doesn’t look like the industry is going to get a breather at any time soon. We did have a few optimists in the crowd. We had three percent who thought that regulatory burden reduction was very likely. I think they’re in for a little bit of a surprise.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  07:33
Yes, I’d say that. We’ve been hearing in the news that there’s quite a bit of focus on fraud and controls to make sure that fraud is controlled. When we think about those survey results, and I know you just scratched the surface of them. I was looking at what happened since then. Which of those responses and criteria are going to carry over into 2021?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  07:57
It’s only been like a few months since the survey closed, and we compiled the results. But I just feel like so much has happened already. And the pressure is really starting to build. First, just let me say, this is a really fascinating time for people who are regulatory junkies, like myself. We have a new Administration. We have a new Congress taking route. It’s an amazing thing to watch. We’re at what I would probably call a liminal moment. We’re basically on a threshold. It’s between what was or what we comprehended and what’s going to be or what we do not yet understand. Looking at it this way, we’re walking through a doorway that takes us from what we’re familiar with to a place where we have an idea about what’s coming next, but we’re still in the dark about that next step. We kind of think we know, but there’s still a lot of unknowns. So, that brings with it some anxiety. It also brings excitement about the future, the opportunities that can surface, and the problems that we’ll get a chance to solve. To me, that’s the energizing part of this. You probably wouldn’t expect that level of optimism from a regulatory guy. But I really do think it’s an exciting time.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  09:07
Excitement and regulations. They’re on the opposite sides of the world. But it’s fascinating. I’ll agree with you on that.
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  09:14
It’s quite the paradox. Yes.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  09:17
I’m curious. Tell us a little bit about the political atmosphere influencing what’s going to come?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  09:23
Oh, sure. Well, I think we’re going to see from the Biden administration and Congress efforts to bring what we might call a transformational change in the financial services industry to promote racial equality, ensure racial justice, boost inclusion, and for the Administration to use not only the existing tools that it has at its disposal but new ones to accomplish that.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  09:47
Do you think that we will see legislation passed in the financial services area almost as drastic as Glass-Steagall type measures, or do you think it’s really going to be around the consumer orientation?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  10:00
I think that we’re probably not going to see a big, huge banking bill anytime soon, like Glass-Steagall or Dodd-Frank, for example, which of course, is the most recent one, or even the change that we saw just a few years ago in the financial services bill that Trump administration was able to get through Congress. I think we’re going to see it as a more targeted and focused type of legislative approach, where there are areas where we have some degree of bipartisan support.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  10:33
Let’s talk about what to expect in how that change comes in?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  10:36
I think the change is going to come not only from traditional brick and mortar insured depositories and other providers as they continue. We’ve seen this happen over the last several years - this evolution toward trying to reach new markets by the depositories. But we’re also seeing fintech firms’ partnerships between fintech firms and banks. There is already discussion about trying to find more ways to provide low or no-cost banking services, and extensions of civil rights protections, such as to the LGBTQ community, and changes under the ECOA and Fair Housing Act. There’s even some discussion about the idea of the U.S Postal Service offering banking services, though the level of support there, it’s kind of unclear, and the industry is watching that closely to see how it’s going to play out. The trade groups have expressed a number of different admonitions about the notion of U.S. Postal Service banking. But what all this tells us, and it’s really early, is that we’re going to see a real emphasis on fair and responsible banking as we move ahead. And that probably isn’t a surprise. If the nation really wants to try to expand access to financial services, it’s going to use all the levers that it has to make sure that happens in a manner that protects consumers at the same time. Another thing the Administration and Congress have clearly articulated is the reinvigoration and strengthening of oversight of the industry by the CFPB, Department of Justice, HUD, and the Securities and Exchange Commission, in particular. Again, a key observation from the survey results was the perception of increased examination scrutiny of fair lending programs, even back several months ago when folks filled out the survey for us. We’ve seen some signs already that that’s happening. The CFPB is looking for more enforcement attorneys. State agencies are continuing to be active. HUD has made some announcements, and we have a number of different forthcoming Department of Justice appointees who are going through the confirmation process.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  12:49
Do you think that it’s really going to be oriented around assisting in the inspection and evaluation of how banks are operating, or do you think that the enforcement is going to result in fines or regulatory actions against institutions that don’t comply?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  13:06
I think you’re going to see a much more aggressive enforcement bent than we have. I think that all these different things that are happening right now really point or raise the specter of more enforcement as it relates to fair business practices. That, in turn, raises the bar for Compliance Management Systems. We noticed a very significant drop off in lending discrimination referrals from the banking regulators to the Department of Justice under the Equal Credit Opportunity Act. It was really a remarkable decline, dropping over 50 percent. The number of referrals dropped about 50 percent in the first three years of President Trump’s administration, as compared to the last three years of the Obama administration.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  13:51
Do you think that the reason for the drop off is not enough personnel going out to the institutions, or do you think it’s really because of administrative policy?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  14:00
I don’t think that we’ve seen a significant drop off in the number of examiner’s available to do fair lending work, although there has been a reduction of the CFPB staff over time. But I think the banking regulators have stayed fairly constant. I think it translates to whether or not there is an appetite to pursue or to prosecute in some of these cases that we may see get picked up again as we move forward into the new Administration.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  14:30
Understood. Yes, I think that over time, even though regulations have changed quite a bit, it’s a big journey for a lot of institutions to undertake and get current with. I’m very curious to see what happens with the results.
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  14:43
Yes, me too. The other thing that’s going to affect that is the Administration is actively working to fill leadership positions at the federal agencies and is ramping up staff in certain areas. I mentioned the CFPB enforcement function, and you know, not all those new leaders are in place yet. Some are still going through the confirmation process. But when they all get in place, they’re going to be bringing new regulatory agendas and priorities, and they’re going to need resources to carry those things out. Where does that leave us if you look at the fluid state that we’re in right now with regard to the near-term regulatory agenda? There are, however, some common themes that are emerging that we’re watching. The first is fair lending and racial equality issues. That’s not only in the financial services area, but the racial equality movement really crosses the entire government and accompanying enforcement by those responsible for administering laws. The second area, where we’re seeing some common themes emerge, and this is one that will probably surprise you a little bit, in regard to climate change management and environmental, social and governance disclosures. Another common theme is compliance risk management and consumer protection in connection with pandemic relief measures. When you think about how much money that the government has put out there, and as you mentioned earlier, concerns about fraud and the enforcement of requirements designed to provide relief to consumers and making sure that those are carried out effectively, it’s no surprise that isn’t a common theme. And finally, I would say regulatory change management, and I’ll tie into that that Community Reinvestment Act modernization is a piece of that.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  16:30
It seems when you state it like that, there are only four major themes. But we all know underneath the covers, it’s a pretty hefty package and a lot of work to install and to monitor. I do want to get into a few of them, including the one that you pointed out that seems more interesting and we haven’t seen before - climate. Can we dive into each one of these? Let’s talk about fair lending first.
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  16:54
Fair lending and access to credit play out on two different levels. The first is, of course, pandemic-related, fair lending access to credit issues, and that would include things such as the Paycheck Protection Program. Who got loans? Who didn’t get loans? Are there any patterns to how the program was carried out by banks, credit unions, and other lenders? Were applicants treated equally for a loan, as well as in connection with loan forgiveness? Where are the loans made? It’s those basic fair lending inquiries that are looked at in connection with other lines of business that will carry through to these pandemic-related programs, like PPP, as well as loan forbearance and loan servicing. Then, we also have fair lending and access to credit in the mainstream. And tied to that are things, like artificial intelligence, machine learning, and alternative data used in lending. These are technologies that may open some doors to credit access for many, but they also carry some risks that need to be managed, And the risks give rise to whether more regulation and examination scrutiny is needed to protect consumers from harm. So, you have what I’d call an interesting conundrum here. We want more access to financial services, and these technologies can help. But at the same time, regulation could kill them and defeat their purpose altogether. We’re going to have to watch what happens there. Next, we’ve also already seen some action by HUD to address LGBTQ issues in lending. And also, they have last year’s disparate impact rule under review at HUD. CFPB has an acting director that’s made it clear that fair lending is a top priority, and that it will also be a top priority of the new director when that person is confirmed. And in Congress, the Equality Act is also on the legislative horizon. I’m anxious to see what happens with it in this session that would add gender identity and sexual orientation to the prohibitive basis of discrimination under the Equal Credit Opportunity Act, the Fair Housing Act, and the Civil Rights Act of 1964. And finally, under fair lending, as I mentioned earlier, about 40 percent of our survey respondents indicated they saw an increase in examiner scrutiny of their fair lending programs. I predict that number is going to increase significantly when we get the survey results back from 2021 later this year, and I think we’re going to see that number increase again in 2022, when things really get cooking.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  19:33
Now I’m looking for like root causes, and I completely understand where technology plays a role. When you start to use artificial intelligence or huge data resources to make decisions without human beings, that can get pretty dicey. You have to teach the automated system in order to be fair, and it’s not just on past data that may not have been fair. My intuition goes directly to that we’re going to leverage technology more and more. But do you think the examiner scrutiny is based on that, or do they have different criteria based on the types of solutions that banks are using?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  20:06
I think the regulators are actually working very carefully through that very issue. The Federal Reserve recently held a full-day symposium or a session on alternative data and artificial intelligence. And, I think that each of the regulators has done the same, so has CFPB. When you start looking at underwriting factors that we don’t necessarily consider traditional, you have to go through the whole issue about whether or not those are good predictors of credit outcome, whether or not there’s a nexus between the information being looked at and pertinent elements of creditworthiness. It’s going to be, I think, something that the industry wants to see happen. And I think that with the embrace of technology, there’s some agreement that is going to help. But I do think that there need to be some safeguards here and further exploration before there’s really wide proliferation of the use of those technologies.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  21:04
Let’s go on to the next one on climate. This one is surprising to see. And I’m very curious about what insights you’re going to give us. So, please.
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  21:14
This is really what I call a burgeoning area of banking policy. I’m just starting to wrap my arms around it. There’s a lot to learn. I’m finding that the issue is multidimensional. It has the attention of regulators in the U.S, as well as the U.K and Europe, and central banks, including the Federal Reserve. For the Federal Reserve to sort of get excited about anything and start taking a look at it, it means it’s something they spent some time thinking about. It also has the attention of the investor and the advocacy communities. So, I’m raising it today really just to try to foster awareness that this is a risk area that the industry needs to stay on top of and keep an eye on what the regulators are doing. Not just the bank regulators, but also the SEC and at the state level. We’re seeing some action there, too. Some of the things to watch for would include the introduction, at some point, of standardized disclosure reports with uniform metrics about the impact of business activities on climate risk, racial diversity efforts, and social investing. Stress tests, or as one Federal Reserve governor called it, “exploratory scenario analysis” that helps banks and regulators assess business model resilience against long-range sequences of events, such as natural disasters, hurricanes, wildfires, floods, all in their portfolios. And at a minimum, there will probably be the expectation, or there is the expectation, to banks will need to have in place a framework to help them assess, to measure, monitor, manage, mitigate and report on climate-related risks caused by environmental shifts. What that translates into is that a failure to manage climate risk could manifest itself through increased credit market, operational, reputational, compliance, and liquidity risks. It kind of transcends the full gamut of risks that we all watch every day.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  23:16
I know you had a couple more themes. Let’s keep our conversation moving. I’m curious where we’re going to go next?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  23:21
Well, I’d like to talk a little bit about compliance risk management and consumer protection in connection with pandemic relief measures. Every bank regulator and the CFPB has made it very clear that the exams they conduct in 2021, and probably 2022, are going to continue to prioritize pandemic-related compliance issues. Our survey respondents were quite prescient, I would say, about the regulatory emphasis on these issues in 2021. And they noted that managing pandemic compliance risk was really top of mind for them. For example, this carries through in the OCC’s 2021 Supervisory Plan, which tells us that compliance risk management associated with the 2020 pandemic-related bank activities, such as the CARES Act, loan forbearance requirements, and other bank provided consumer loan or account accommodations, is an exam priority for them. So, why and what are they looking for? The effects of the pandemic on overall compliance risk, as well as specific areas of risk, for example, the Service Members Civil Relief Act and risk associated with increased foreclosure volume.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  24:38
In that example with the OCC, that’s definitely for OCC-regulated institutions. I find that maybe the criteria are still useful for institutions that are smaller and are not regulated by the OCC. What advice would you give to address this particular topic area to institutions that are smaller in size?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  24:58
The first thing is the OCC has only about 110 banks that are greater than two and a half billion in assets. So, it’s going to affect all of them. I think that, as I mentioned, each one of the banking regulators has made it clear. At least, those who do talk about their examination priorities publicly. We picked up some of this from our Colloquium discussions, that pandemic-related compliance was carrying through across the full spectrum of institutions that they regulate. Finally, I’d like to talk a little bit about regulatory change management, and as I mentioned, I’ll try to tie Community Reinvestment Act modernization into that. We could probably do an entire podcast just on the state of affairs with regard to CRA modernization. It’s really important, and it’s really an interesting topic to discuss. But first, as a reminder, regulatory change management, as I mentioned, was identified as a top concern by our survey respondents. So, just look at how much the industry has had to absorb in the past year between Paycheck Protection Program regulations, where we were having, you know, interim final rules dropping from the sky, like every night for four months, and policy guidance from the bank regulators. It never stopped, even in a pandemic. And you know, our respondents were actually dead-on about the low prospects for regulatory burden reduction. I would like to mention just a few things on the horizon that could stress regulatory change management programs over the next couple of years. And at the same time, point to why it’s so important to have a fully effective regulatory change management program in place. First, I’ll use CRA modernization as an example. Here, we have a situation where the industry really wants to see the three agencies that have CRA responsibilities - that’s the Fed, the FDIC, and the OCC - move forward with a uniform rule. They’ve had a uniform rule in place ever since CRA’s inception in the late 1970s. So, the industry is continuing to raise concerns about the rule that the OCC issued last May, particularly with respect to burden and performance measurements. In particular, community advocates have issues as well. The Democrats on the House Financial Services Committee and the Senate Banking Committee don’t appear to like the OCC’s rule at all. Many State AG’s don’t like it. One thing is for certain, we’re going to see some change here, and managing a large-scale regulatory change like this is going to require careful planning and commitment. And, of course, those national banks right now that are subject to the OCC’s rule are trying to do exactly that. All against the backdrop that there could be some further change. You know, one thing that struck me about this is, as a regulator, we sometimes felt that we did our job well, if, at the end of a regulatory process, both the industry and the advocacy community didn’t like the outcome for different reasons. But here, you seem to have both sides lining up for many of the same reasons. So, that’s really interesting for me to watch. And it signals that there could be some further change here. I’ll throw out a couple more. One is Dodd-Frank, Section 1071. This is a long-overdue regulatory development that needs to come out of the CFPB. It relates to small and minority-owned business reporting regulations. When this gets finalized, it’s going to require a lot of work and take considerable time to implement. Hopefully, the CFPB will provide an ample implementation period. It also brings with it the need to review data that’s collected and determine what it means to your institution from both a CRA and fair lending standpoint. One thing I would want to make sure of is, I really want to know what that data says about me before I send it to the government, and before it’s made public. Of course, that’s years down the line. But it’s something that we’re going to have to watch really carefully, and it’s going to really require a fully effective regulatory change management program. Another example is Dodd-Frank, Section 1033. This is the CFPB’s requirement or responsibility to issue a regulation on consumer access to financial records. That’s going to be another really big one. The CFPB is in the process of working on their next step in that regulatory process. It’s a very complicated issue. It brings in third parties, aggregators, questions about who owns this data, and who’s responsible for it. How will this rule interact with other rules that are in place to safeguard consumer interests? Basically, what 1033 does it requires consumer financial service providers to give consumers access to financial account data in a usable electronic format. That sounds kind of simple, but it’s not. The data includes information relating to any transaction, a series of transactions, or to charges and usage data on an account. So, it’s going to be another one to watch really carefully in 2021. I’ve got this list of things that I’ve been looking at. It’s as long as your arm - cybersecurity, Bank Secrecy Act, AML, compliance issues, privacy issues, the labor transition, qualified mortgages, or QM rule. There’s just a lot here and a lot that the industry is going to have to watch. And you really have to question whether traditional manual approaches to effectuating regulatory change across your organization and managing that change from inception to implementation, and then monitoring and reporting to your business leaders, whether or not that’s going to be sufficient. And that’s the same for the risk management that goes along with it. This is a place where technology can probably help both small and large institutions. We’ve gone way past the point where you can successfully manage this type of change through spreadsheets, even in smaller community banks.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  31:27
It’s pretty clear. there’s a lot for the industry to prepare for, a lot to prioritize. How do you think a professional in the compliance area will be able to prepare their institution for the shift in this focus?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  31:41
Let me offer just a few suggestions. I don’t think these things that I’m going to mention are going to be any surprise to our listeners. It all comes back to the fundamentals here. First, I think what’s essentially underlying all of this is a very vibrant risk management framework or foundation that is flexible enough to respond to very rapidly changing circumstances. The pandemic is one example of a rapidly changing circumstance - one that we didn’t expect to last this long. And that demonstrates how quickly we need to be able to change course and how important it is for us to be resilient. And to have a risk management framework that still safeguards the institution’s interest here. We also have new and emerging risks that I mentioned, like climate risk, as another example. The flexibility and having that vibrant risk management framework in place is a fundamental first step. Second, Compliance Management Systems, there’s absolutely no substitute for a strong, up-to-date Compliance Management System. Every regulator expects an organization to have it. It also serves as a mitigating factor when regulators are considering how to address noncompliance through enforcement. Basically, the stronger the program, the better off you’re going to be. And of course, an essential element of the CMS has fully updated policies and procedures and actual practices that align with them. It’s another key component. And most importantly, part of that compliance management structure across an organization is having very engaged and great people. We saw so many people really rise up during the pandemic and make sure that their institutions were following the rules and keeping other aspects of compliance, aside from just the CARES Act. Exams continued and people still had responsibilities to maintain a high level of compliance. I think that’s really a strong testament to the great people that really work in this area. Third, investing in comprehensive risk assessments is really, really a critical thing. I think both small and large institutions can benefit from that. And that means every business line and every particular law and regulation that ties into that business line. Fourth, I’d say using technology across the company to automate aspects of compliance and take some of the risks out and to free up some time to concentrate on things, like developing a really strong risk change management process and to manage risk and compliance and be able to report results to leaders. Technology can be a really big help there. And finally, of course, having a robust regulatory change management program in place for all the reasons that I mentioned today.
Samir Agarwal, Vice President, Banking Compliance Solutions, Wolters Kluwer  34:33
Thank you, Tim. You’ve definitely given us a flavor of what to look forward to. I really appreciate you joining us today. I’ll leave you with one last question here. What does Wolters Kluwer offer to assist compliance professionals and their institutions on how to do all those things?
Timothy Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer  34:53
We have a very full set of compliance technology solutions that cover almost every regulatory matter that I mentioned today. Our OneSumX® tool for Compliance Program Management is one example that helps organizations not only with their regulatory change management program, but with managing and controlling risk on a daily basis. Our Wiz® solutions, that include our Fair Lending Wiz® solution, Community Reinvestment Act with CRA Wiz® and our HMDA reporting solution, are key elements here that provide a basis for organizations to be able to understand what their data is saying about them and to prepare for exams. We also have a full slate of Advisory Services that include conducting fair lending and UDAAP risk assessments, compliance risk assessments, and risk reviews of fair lending data. We conduct CRA self-assessments to help our customers prepare for forthcoming examinations and to get a read on their level of performance. And that will become even more important as CRA modernization takes shape. And we conduct Compliance Management System reviews, both for Insured Depositories as well as the third-party partners that they may be helping make loans. It’s a full range of solutions, both product and service.
Greg Corombos, News Director at Radio America  36:22
That’s Wolters Kluwer Vice President of Banking Compliance Solutions, Samir Agarwal, joined on this episode by Tim Burniston, Senior Advisor of Regulatory Strategy with Wolters Kluwer. Wolters Kluwer hosts this podcast and is a market-leading provider of advisory services and technology solutions for optimizing compliance and risk Management programs. For more information and additional guidance, please visit Wolters Kluwer.com or call 1-800-397-2341. We also invite you to subscribe to the Business Compliance Insights podcast at Apple®, Spotify®, or wherever you get your podcasts. And please join us for future podcasts focused on navigating emerging trends in regulatory compliance.