The Consumer Financial Protection Bureau (CFPB) is in overdrive, pushing lenders and their service providers to implement Compliance Management Systems, or CMS. 

Regulatory pressure is nothing new, but with the added scrutiny of
these regulatory agencies, it important for you to take the necessary steps to ensure your organization fills any compliance gaps that may raise red flags. The best way to plug your compliance holes and meet the expectations of all the agencies concerned with fair lending practices is to fully embrace the CFPB’s guidance and put in place a CMS.

It is vital that you know what a CMS is, how to implement one, or how to make what you are already doing today meet the new standards.

Your board of directors and senior management should take an
active role in your compliance efforts. This sets the tone at the top
and defines compliance expectations for the company as well
as its service providers. If management cares about compliance,
everybody else will (or at least should) care about it too.

By setting this example, leadership should appoint a compliance
champion, an individual dedicated to overseeing the compliance
mandates the board establishes. Senior management should also
create the compliance structure into which operational policies,
procedures and standards are placed. They must also proactively
allocate resources to compliance, as well as review periodic reports
and recommend course correction on compliance matters.

Your compliance program is the nuts and bolts of a CMS – where the heavy lifting occurs and the easiest place for things to fall through the cracks. Administered by the compliance champion, the program includes approved written policies and procedures, training, monitoring and corrective action. It should give accurate information to help make informed decisions about the organization’s ongoing compliance posture and activities.

Even the best businesses receive customer complaints. From a
compliance perspective, complaints give valuable insight into potential issues. As such, they draw the attention of regulators. A consumer complaint management program is the third element of a CMS. It helps log, track, investigate and resolve complaints in a timely manner. The compliance champion should analyze complaint data to identify and understand underlying issues and business risks.

Contrary to original thought, you don’t have to monitor every possible source of complaint (Facebook, Twitter…etc). Complaint management has become business critical and organizations need to properly protect themselves. 

the CFPB recommends an objective audit of a company’s operations to ensure compliance with legal requirements, as well as internal policies and procedures. The word “audit” may sound scary, but it isn’t. Your organization’s personnel may conduct an audit; however, they must be independent to the functions being audited. This provides objectivity and eliminates conflicting self-interest.

The audit function can start small and build over time. Start by
manually examining a random sample of 10 or 20 transactions each month to make sure all internal processes are being followed and the paperwork is complete. If it’s not complete or a problem is discovered, it may be time to teach or retrain employees. A CMS can streamline the audit process and provide ongoing assurance and validation that obligations are being met.