What is a Compliance Management System?
Quite simply a Compliance Management System, or CMS for short, is a comprehensive compliance program. A CMS is an integrated system comprised of written documents, functions, processes, controls, and tools that help an organization comply with legal requirements and minimize harm to consumers due to violations of law. A CMS is woven into every functional area in your organization, from sales to advertising to operations and administration.
What does a CMS do?
- Establishes oversight for your compliance responsibilities.
- Develops the execution plan for rolling out, monitoring, and communicating the program.
- Ensures that feedback gets efficiently tracked and acted upon.
- Reviews the operations to ensure responsibilities are carried out and legal requirements are met.
Implementing a Compliance Management System:
4 Steps to Keep You out of Regulatory Quicksand
Regulators, and specifically the CFPB, expect every entity to have an effective CMS adapted to its business strategy and operations.
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Under its guidelines, a CMS contains 4 areas of focus:
- Board of Director Oversight
- Compliance Program
- Consumer Complaint Response
- Audit
A good Compliance Management System can proactively address the risks relevant to your organization while meeting multiple regulatory requirements. It can shine a light on problems that may be a symptom of deeper issues within your organization. Properly administered, it can fix those issues before they blow up into something costlier.
Meanwhile, management will be better prepared when regulators come knocking on the door, allowing them to minimize the typical “fire drills” that distract your organization from its core business. Finally, and most critically, a CMS prevents harm to consumers by minimizing violations of the law and helping the workforce meet its compliance obligations.
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