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#9530 - 01/25/02 07:45 PM Outsourcing compliance
PABanker Offline
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Posts: 491
Blue Ball, PA 17506
Just wondering if any banks are doing this compliance option and how it works?

Our bank is investigating this option.

Thanks


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General Discussion
#9531 - 01/25/02 08:29 PM Re: Outsourcing compliance
be a better banker Offline
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be a better banker
Joined: Aug 2001
Posts: 34
Sugar Land, Texas
We hired an individual in the Houston area who has her own company. She comes in monthly to perform compliance audits and then after identifying weaknesses, conducts training. Quarterly she attends to the Bank's Director Audit Committee meetings to present the audit reports. She has been doing this for over a year and the response has been good. As a community bank this has helped divide the workload though as Operations Manager, i still write the procedures.

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#9532 - 01/27/02 01:27 PM Re: Outsourcing compliance
Richard Insley Offline
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Richard Insley
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Toano, VA
Although there is a need to monitor ongoing compliance, this should not be the primary mission of the compliance officer--maybe it shouldn't be a mission at all. Compliance is not a type of auditing--it's a type of management.

To be effective, the regulatory compliance manager must be involved at the earliest stage of product development. By designing compliance into the product, you reduce the chances of violations later. Quality control measures should also be designed into products. Responsibility for QC should rest with the business unit that's selling the product, not an unrelated staff support unit (the compliance officer.)

Outsourcers can audit effectively, but are rarely brought into early discussions & planning sessions. Without guidance at this critical stage, you allow development of products that are much more likely to suffer from regulatory flaws.

For my money, I'd invest in a good lock for the barn door, rather than cowboys to keep chasing the horses down and bringing them back.

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#9533 - 01/29/02 05:58 AM Re: Outsourcing compliance
Don_Narup Offline

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Las Vegas Nevada
As with Mr Insley, my comments come from a totally biased but different point of view, as our business provide different types of compliance services to the banking industry.

Trainning is an on going and important part of compliance, but no guarantee compliance is being adhered too. Of equal importance is the monitoring of CRA and HMDA activity.

You need to know what the bank looks like before the regulators do, and far enough in advance, so that if any trends need to be changed there is time to do it before they arrive for an exam.

Unless a bank chooses to makes an expensive investment in products and personnel, outsourcing is a more efficient and less costly way of monitoring, and the time it takes to do this in house can then be put to more productive use.

Take a look at what it would cost to equip and train, and keep trained, a staff that can provide the services an outsource company can.

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#9534 - 01/28/02 10:58 PM Re: Outsourcing compliance
Richard Insley Offline
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Richard Insley
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Toano, VA
Don--I concede your points about CRA and HMDA. These are indeed "how's it gonna look" subjects and ongoing monitoring is important. As to the bias that I bring to this discussion, it's driven by my 16 years as a compliance officer, not my current business activity which only rarely involves consulting with banks.
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#9535 - 01/29/02 01:51 AM Re: Outsourcing compliance
Don_Narup Offline

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Las Vegas Nevada
Richard
I stand corrected and apologize for the inference.
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#9536 - 01/29/02 02:35 AM Re: Outsourcing compliance
Richard Insley Offline
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Richard Insley
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Toano, VA
Don
I'm sorry if I seemed to be looking for an apology. That wasn't my intention. I just wanted to be clear that my view of the "C" function is based on lots of battles (sometimes bloody) with business managers who didn't appreciate outsiders meddling in their affairs. They didn't welcome anyone who came to criticize their operations or methods, but would accept assistance from a support unit that operated with the motto "how to" rather than "not to."
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#9537 - 01/30/02 06:46 PM Re: Outsourcing compliance
Rangers Fan Offline
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Depending on the size of you bank and the size of your staff, if you can devote full time to compliance, that is one thing. We are a small bank and I also manage the credit dept. along with compliance, so we out source some of the compliance audits. We have sort of a "cafeteria plan" where we tell them what audits we want them to do, that way I can do the ones I am comfortable with and learn from them on the ones they do. Plus I get the peace of mind someone else is laying in bed awake at night tossing around and worrying about details on everything.

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