Critical Steps to CFPB Compliance

Customer Expressions, the training team for I-Sight Investigative and Case Management Software, recently turned to Braden Perry, a veteran government investigation and regulatory compliance attorney, to discuss the critical steps to Consumer Financial Protection Bureau (CFPB) compliance. The full article is provided below:

With the deadline looming for financial institutions to comply with the regulations set out by the Consumer Financial Protection Bureau (CFPB), financial services providers are (or should be if they aren’t) working hard to get their ducks in a row in time. CFPB compliance has become a burning issue.

And while the larger banks and financial institutions are first on the firing line for the new regulations, there is wide speculation that the smaller financial service providers will be next on the agenda. It makes sense for all providers to start taking steps toward CFPB compliance as early as possible.

Step by Step to CFPB Compliance

“First, company leadership should devote adequate resources to the compliance program, which will greatly increase the chance of catching and fixing any errors that may occur,” says Braden Perry, partner in the Kansas City-based law firm of Kennyhertz Perry, LLC. And with the CFPB mandate so well known, this step should be automatic and the importance of dedicated resources obvious.

Once the resources are established, a senior management level Chief Compliance Officer should be appointed, says Perry. Having a CCO who gives regular reports to top level staff is vital to ensure the proper oversight of the CFPB compliance functions.

“Third, a robust customer complaint system to handle any complaints that consumers may have about your business will alleviate issues before they arise,” says Perry. The customer complaint system can take many forms, but it should provide a clear and simple way for customers to reach the company and for complaints to be heard, tracked and resolved.

And finally, Perry recommends arranging independent compliance audits of the company either by a third party or someone who is not actively involved in the CFPB compliance management system. This vital step allows management to get a third party view of the compliance landscape and adds credibility to the program.

The CFPB Has Teeth

The CFPB, which receives direct funding from the Federal Reserve, is not an organization to be taken lightly. “Frankly, it’s a much more powerful agency than many other federal agencies,” says Perry.

“The CFPB may investigate, issue subpoenas and civil investigative demands, compel testimony, and conduct hearings and adjudications to enforce compliance, including fines and issuing cease-and-desist orders,” he says. In addition, the CFPB may initiate actions for civil penalties or an injunction and it may refer potential criminal issues to the Department of Justice.

In the current environment of heightened awareness of abusive corporate behavior, especially as it relates to financial service providers, there is much to be said for a watchdog that is focused on unfair, deceptive or abusive practices. Whether banks will be able to meet the compliance requirements by the deadline remains to be seen, but the resulting changes in customer service and complaints management will provide the banking industry an opportunity to improve their relationships with consumers on every level.

The original article can be found here:

Braden Perry, partner in the Kansas City-based law firm of Kennyhertz Perry, LLC, is a former federal enforcement attorney and veteran in government compliance, has over 10 years of experience in the areas of financial services, compliance, internal investigations, enforcement matters, and regulatory issues in private practice, federal government, and in-house as a Chief Compliance Officer of a global financial firm. He currently advises firms on compliance matters and frequently speaks on compliance and regulatory topics.