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What is a Compliance Management System?
A compliance management system is a system that fulfills the key regulatory requirements, thereby avoiding fines and scrutiny. Implementation of the system requires the following:
Board of Directors & Management oversight:
A high-level executive, customarily the Compliance Officer, must serve as the direct line of communication with the Board of Directors for your organization. This assignment must be more than a title – he/she needs to take action by:
- Setting expectations for all employees in the workforce.
- Staying informed on regulatory and compliance matters.
- Requiring action on “high priority” issues.
Your compliance program needs to have an executive sponsor as well as a systematic way of tracking the distribution, attestation and storage of polices, procedures and trainings for your workforce. It’s important the compliance program includes:
- Policies and procedures that are formal and written. They must then be reviewed on a regular basis and approved by the executive sponsor.
- Trainings that enable compliant behavior and are educational by providing proof of retention.
- Monitoring and reporting on your compliance initiatives for early issue detection and response.
- Continually improving corrective action across all processes, content, and people.
A consumer compliant management program:
Your program should be viewed as the checks-and-balances your compliance management system is working. Your consumers must have a known way to communicate their concerns. If you have a centralized management system, such as Dealergripe, you simply need to communicate to your customers that the system:
- Logs and tracks complaints, including complaints of service providers.
- Allows for investigating complaints through analysis, in order to understand the underlying issues.
- Provides prompt resolution for complaints, including an escalation procedure.
Independent compliance audit:
An audit of your program, in some fashion. The recommendation from the CFPB is that your audit is:
- Reviewed for operations compliance with legal requirements, policies and procedures.
- Comprehensive in scope and has an appropriate frequency.
Your Compliance Management Secret Sauce
An automated compliance program is the core element to identifying, defining, formulating, monitoring, and improving an organization’s required compliance actions. The compliance management system outlined above is a cycle of required elements that are interconnected and are enabled through an automated compliance program.
Learn more about Compliance Management Systems in our Fair Lending Topic Center