Financial institutions have a love‐hate relationship with regulators. Nearly 13 years after the 2008 financial crisis, Americans are wary of Wall Street, but believe regulators are essential to maintaining credibility and ethical standards.
Most Americans agree that additional regulations are necessary, but for financial institutions, regulators pose a significant threat to operations, revenue, and growth. A regulator inquiry involves time, people, and resources to address.
A CATO Institute study observed public attitudes on Banks, Financial Institutions, Consumer Finance, and the Federal Reserve.
Americans do not think that regulators help banks make better business decisions (74%) or better decisions about how much risk to take (68%). Instead, Americans want regulators to focus on preventing banks and financial institutions from committing fraud (65%) and ensuring banks and financial institutions fulfil their obligations to customers (56%).”
Create and document clear roles and responsibilities.
Having documented processes will help the regulator understand who is involved and responsible for each aspect of the compliance program. Firms need to show the examiners their compliance program has adequate funding to support the staff and technology resources needed to satisfy the regulatory requirements. The examiners will want to see that you are testing and reevaluating your compliance program as often as necessary.
Build a relationship with your regulator.
The most important time to build a relationship with your regulator is when you have no active inquiries. Your regulator can provide you with access to a tremendous amount of data that can be helpful to learn. In addition, regulators can help you and your firm adjust to upcoming regulation changes, provide industry information, and help create more effective compliance programs
Prepare and respond quickly to inquiry requests.
If you do land under investigation, maintain a spirit of cooperation and explain the facts that led to the investigation. Regulators want to see that the firm is trying to resolve any issues. You are better off admitting a shortcoming in your compliance efforts than having it discovered by examiners.