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Looking at the Bright Side of Compliance
It's official. The first Christmas catalogue has arrived (L. L. Bean's). This means that summer is officially over. So much for time at the beach. And, this means the hectic season of Christmas - or whatever winter-based holiday you celebrate - is upon us. It means the giving of gifts and the counting of blessings.
While most of us have manifold blessings, they can be hard to count when sitting at the compliance desk. After all, compliance tends to be counted in the context of regulatory burden. In fact, there tends to be no more negative place in the organization, with the possible exception of the secret office that hands out red ink.
How can this be when compliance is supposed to involve good stuff? Compliance is consumer protection. Compliance is Truth. Compliance is fairness. Compliance is protecting the good guys and tracking down the bad guys. Shouldn't this be fun? Shouldn't it at least be pleasant? Where did we make the wrong turn?
If we really wanted the result, the work should be a source of satisfaction rather than a cause for complaint. So why do we hear so many complaints about "regulatory burden?" Is it possible that we work for Scrooge instead of Santa?
When people complain about regulatory burden, there are usually two driving issues. The first is that regulations mean that something has to be done in a specific way. And it is never the easy way or the way we would design if left to our own devices. Instead, regulations always seem to dictate doing things the difficult way. That certainly provides some grounds for complaint.
The second driving issue is potentially bigger: we didn't want to do what the regulations require at all. We didn't want to inform customers about the true cost of the product. We want to choose who will get loans - and who won't. We want to choose the easy neighborhoods and skip the hard ones. We want as much money as possible in and passing through the bank. Who cares who benefits or who is hurt?
These objections are more troublesome. Unfortunately, they are all too often the real objections to regulatory burden. But consider what these objections mean.
Hidden costs and fees? Asking consumers to sign up for credit plans without understanding the true cost now has a name. It is called a deceptive trade practice. Creditors that have aggressively pursued programs such as these now have a label: predatory lender.
Expecting consumers to sign up for or happily accept products that cost them unexpected fees now also has a name. In addition to being called bounce protection, it is called an unfair trade practice.
And what about only making loans where it is easy and to customers that are sophisticated and experienced borrowers? This may sound like a great plan and a good way to be sure there is time for a vacation. But does anyone think about where future customers come from? And how do people learn how to obtain and manage credit? This is why we have CRA.
And finally, do you really want to help drug dealers and terrorists take advantage of us and our children? Sure money is money, but those who bring it into the bank are not all the same. We have a professional and a personal interest in sorting out those who are up to no good.
Where does this leave us? How burdensome is regulatory burden? Most of the burden that we can honestly call burden comes from the requirement to do something a certain way. How do we minimize that burden? We conduct our business in a way that will not generate or justify any more regulations. Then we can do good things the way we want to.
Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 10, 10/04
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