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Over the past 25 years the financial services industry has experienced swings of deep and far-reaching regulatory changes. Although very large or complex organizations may have some unique compliance recordkeeping and reporting requirements, the vast majority of banks, non-bank financial institutions and other financial service providers shoulder a full repertoire of sophisticated regulatory requirements, nearly oblivious to their size, geographical location, business targets or complexity of products and services. Costs associated with full-time compliance staff employment and benefits have strained organizational resources supporting non-core business functions, such as compliance program management and operation.
As a take on the old Gerber television advertisement, “Compliance is our business… our ONLY business.” Chartwell Compliance dedicates its core business to providing such outsourced compliance support and we observe key benefits for our clients time and time again.
Compliance outsourcing allows you access to specialized skills and reduces the need for internal commitment of specialists. These benefits remain the key reasons why many financial services companies opt for some form of compliance outsourcing. By outsourcing, you can take advantage of expert and skilled services of compliance professionals that you would not be able to justify as full-time employees. Just taking Chartwell Compliance as an example, the experience level of our staff averages 25 years directly managing compliance requirements in the industry and from perspectives blended among financial institutions, money services businesses, regulatory agencies and consultancies.
Breadth and depth of experience are important points to consider, too – 25 years in the same organization filling the same role is a vastly different experience than being on teams among different organizations in different roles in the industry. There are reasons why, historically, there have been migrations of regulators to for-profit financial organizations and vice versa. Cross-pollination brings perspective of the “sister” organizations of the industry to the table. Outsourcing compliance services is based on that concept without the long-term obligation to your organization to add costly full-time staff. Consider, too, that your consultants have opportunities to bring a quiver of arrows that represent experiences among numerous organizations like yours or that have already fought the compliance battle that you are now beginning. You benefit from the provider’s expertise in solving problems for a variety of clients with similar requirements.
A small to medium-sized business can contain the costs of access to specialized compliance professionals, benefit from a broad and deep base of experience and select from a “menu” of services, choosing only those that make sense when fitted with the available in-house resources. Organizations can pick and choose among outsourced services to fill gaps or to provide better coverage to high-risk processes. It’s not uncommon for an organization to be “unbalanced” in its organic expertise among compliance disciplines. Whether your staff leans toward anti-money laundering experience or consumer loan requirements, outsourcing allows you to leverage the specific experience needed to balance the knowledge base.
Consider that, regardless of size or complexity, the technical requirements for financial service providers lay out on a pretty level playing field. That’s a good thing from the standpoint of competition and fair business practices; however, a level playing field also holds smaller organizations to standards that stretch the capabilities and bandwidth of their more-limited human resources. Although they can adapt the measurement of some requirements to the organization’s profile, regulators are forced, too, to measure many legal and regulatory requirements by the strict letter and spirit of the rule. So, even if your organization only has one or two transactions of a particular type during an evaluation period, all the policies, procedures, disclosures and training that are required of organizations for which those transactions are a core product apply to your smaller universe. Voila! The “cost” of compliance.
Ask anyone who has made a career in financial services what the top challenges are to successful compliance management and, inevitably, among the top responses you will find “changes in regulatory requirements.” Think about the profile of your compliance outsourcing provider. Not only can and should they employ the most recent compliance requirements in the work that you have engaged them to perform, but, you can benefit from ensuring an element of your agreement with them includes a provision for keeping you or key members of your staff in the know.
Relationship-building is another key benefit of outsourcing with compliance professionals. By engaging highly-experienced professionals, you also have the opportunity to facilitate links to regulators, other beneficial service providers and industry leaders. Years ago, management courses focused on the concept of the “sphere of influence.” One’s workplace sphere of influence was the span of effective relationships he/she built and maintained among colleagues, management, direct reports and business partners. Outsourcing has the potential to exponentially expand your sphere of influence beyond mainstream internal and external contacts.
One last benefit is the independence of the consultant. You are likely to get some unique feedback regarding the completeness and cohesiveness of your compliance program and posture from a third party who is not a part of or subject to organizational chain-of-command dynamics. This benefit is priceless.
After all is said and done, any organization can benefit from professional compliance services. Any services performed by a third party for your organization, though, need to be managed.
Here are some key components to successfully partnering with outsourced compliance service providers:
In the evolution of the financial services industry, most organizations have found that their internal resources cannot meet every purpose – either due to bandwidth, expertise or a combination of both. Consider how compliance outsourcing, when surgically tailored to meet the needs of your organization, can raise the level of compliance success and relieve internal resources to be applied to your core business. Chartwell Compliance welcomes to discuss your compliance challenges with you to find your solution.
Mary Thorson has over 29 years of experience in bank and non-bank regulatory compliance, training, and financial institution program reviews and examinations, Ms. Thorson has developed a broad and deep portfolio of technical expertise that spans consumer protection, lending, deposits, operations, privacy, third-party management, collections, and anti-money laundering/anti-terrorist financing laws and regulations.