Retrospective On 2018’s Top Regulatory Trends

Every year, our experts in the Regulatory Operations Center take a stroll back through the data to identify trends and themes that shaped the industry during the previous twelve months. Read on to see the disturbing discoveries we made during our deep dive into the wild ride that was 2018!

Regulatory “relief” was anything but relaxing.
2018 saw a record number of regulatory pronouncements issued that affected banks and credit unions. The 265 regulatory pronouncements issued in 2018 reflected a 20% increase from the 220 issued in 2017. On the first business day of 2019, there were 21 items already in the queue for processing by the Regulatory Operations Center.

Banks and credit unions are both still spending too much on compliance.
Because regulatory relief didn’t reduce regulatory activity, the work of managing regulatory change remained burdensome and pervasive. A number of “red flags” across multiple organizations shows that compliance operations failed to gain efficiency. Most FIs still rely too heavily on human effort and too little on technology adoption, resulting in inconsistent outcomes flowing from duplicative or redundant business processes.

Enforcement actions with fines and penalties against individual directors and officers rose sharply.
An increase of 500% over the prior year included a dramatic spike in the number of actions taken against individual officers for wrongdoing, even in cases where no action was taken against their financial institution. The trend of director-focused actions persisted, with fines escalating into the hundreds of thousands of dollars per incident.

Changes in executive role expectations for risk and compliance officers are transforming the skill sets needed for peak performance.
Today’s regulatory environment demands incumbents with modern proficiencies, in areas like data literacy, business intelligence and technology implementation and integration. The domain is no longer ruled by box-checkers or grammar-sticklers, and even those with MBAs or JDs now find themselves falling behind their more tech-savvy peers who understand how to leverage and rely upon regulatory technology and business intelligence tools.

Until recently, we could predict with some accuracy, based on past performance and behaviors, how the future might unfold. No more! The year is already off to a strange start: 21 items already waiting to be analyzed by our experts (from before the shutdown) and a government shutdown that leaves us with a Federal Register that isn’t being maintained, Agency websites and support channels unattended, key public data like call reports unavailable for access and no clear idea on when the shutdown might end. Rules issued in 2018 raising more questions than they’ve answered. Our prediction for 2019: Greater volatility and more uncertainty. Buckle up for the wild ride ahead!