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Banks, Credit Unions Feeling New Regulatory Burdens

A recent survey found that U.S. banks and credit unions are carrying a much heavier regulatory and risk management burden than they were a year ago. This is due in part to heightened concern over the mortgage guidelines recently finalized by the CFPB.

by Staff
March 20, 2014
2 min to read


MINNEAPOLIS — U.S. banks and credit unions are carrying a much heavier regulatory and risk management burden than they were a year ago. That’s according to the results of the latest Regulatory & Risk Management Indicator for the U.S. banking industry issued this week by Wolters Kluwer Financial Services, a provider of risk management, compliance, finance and audit solutions and services.

The Indicator began with a baseline score of 100 in January 2013. That’s when Wolters Kluwer Financial Services surveyed nearly 400 U.S. banks and credit unions. It rose to a score of 121 in January 2014 when the company surveyed about the same number of financial institutions. Driving the increased score were mounting pressures expressed by banks and credit unions in all seven of the Indicator’s compliance and risk management factor categories. Also weighing heavily on the minds of respondents was the more than $8 billion in new regulatory fines and settlements at the federal level in the last three months of 2013.

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To calculate its Regulatory & Risk Management Indicator, Wolters Kluwer Financial Services uses 10 main factors, seven of which revolve around direct input from banks and credit unions on their top compliance and risk management concerns and three of which are based on regulatory data the company compiles.

In particular, financial institutions participating in the Indicator demonstrated a significantly heightened concern over the Consumer Financial Protection Bureau (CFPB)’s recently finalized Qualified Mortgage, Qualified Residential Mortgage and mortgage servicing requirements and guidelines. In fact, only a third of respondents said they planned to offer non-QM home loans following the implementation of the CFPB’s new rules.

On the risk management front, banks and credit unions remain most concerned with regulatory risk and fair lending risk more specifically. Other major risk management concerns included asset and liability management, IT risk and fraud.

“The latest Indicator results verify a growing number of U.S. banks and credit unions are more proactively addressing regulatory change and potential risks,” said Timothy Burniston, vice president and senior director of Wolters Kluwer Financial Services’ Risk & Compliance Consulting Practice.

“Not only are these institutions more concerned about compliance and risk management, but they’re also devoting additional time and resources to addressing these areas to head off potential issues, and facilitate growth and performance objectives.”

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For more information on Wolters Kluwer Financial Services Regulatory and Risk Management Indicator for the U.S. banking industry, visit www.WoltersKluwerFS.com.

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