Online Lenders: Time To Tighten Up Your Compliance Programs
The Consumer Financial Protection Bureau (CFPB) has supervised the financial services industry under its guidance since its inception following the 2008-2009 financial crisis. However, the CFPB has been gradually extending its reach to the more specialized areas of the industry, such as online lending.
Indeed, online lending companies (and, going forward, other specialty financial companies as well) should anticipate heightened oversight from the CFPB and increased supervision from their state regulators. In preparation for this new scrutiny, online lenders should be prepared to demonstrate the resilience of their compliance programs—including their compliance management systems (CMS)—as well as their access to the necessary resources for mitigating their risk.
Because the CFPB places such high importance on having a robust CMS, it expects every entity under its supervision to have an effective CMS in place that is adapted to its business strategy and operations. The CFPB addressed several other expectations in its 2013 issue of Supervisory Highlights for an effective CMS, including whether it:
Establishes the organization’s compliance responsibilities;
Communicates those responsibilities to employees;
Ensures that responsibilities for meeting legal requirements and internal policies are incorporated into business processes;
Reviews operations to ensure responsibilities are carried out and legal requirements are met;
Takes corrective action, and
Updates tools, systems, and materials, as necessary.
Online lenders, the CFPB is headed your way, and it's focused on excessive fees, bank account closures, and collection efforts. Are you prepared to demonstrate to them that you are in compliance?
With Procipient’s Compliance Policy Management (CPM) feature, your organization can manage all of its policies, procedures, and enterprise documentation for its regulatory, legal, and compliance requirements in one place. The CPM feature allows you to produce documentation for audits and examinations with a few simple clicks, and you can even link your policies to different regulatory requirements and areas of risk across your organization.
Talk to a Procipient® team member today about how our ERM-GRC solution can help ensure your compliance in the wake of heightened focus and regulation from the CFPB by following the link below: