Board Oversight 
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The CFPB holds your executive leadership accountable for your organization’s overall compliance. The agency believes the effectiveness of a compliance management system is grounded in the actions taken by its board and senior management.

But, your board has lots of other things they would rather be doing than focusing on compliance. In fact, in a recent BDO USA survey compliance ranked last on boards’ lists of priorities:

It’s Time to Redefine Your Board’s
Compliance Obligations

Don’t confuse lack of enthusiasm for lack of responsibility. Despite their feelings on the subject, the directors on your board need to spend some of their time and energy on compliance. The CFPB requires it, your capital partners require it, and, ultimately, it makes good business sense.

In order to bring all these parties into alignment, an organization needs not to minimize its compliance program, but redefine it, emphasizing the inherent link between compliance and business objectives such as leadership continuity, risk management, and maintaining a competitive edge.

What your board, business, bank, and regulators are all looking for—what they can all agree on—isn’t more compliance, but better compliance.

Compliance is not at the top of your Board’s priorities

Senior leaders would rather spend time in these areas:
  • 47%
  • 45%
  • 38%
  • 62%
  • 16%

A CMS contains 4 areas of focus:
Mouse over each area to learn more.

What the CPFB Is Looking for in
Board of Director Oversight

The CFPB spells out its reasoning on boards of directors rather clearly:

“The board of directors is ultimately responsible for developing and administering a compliance management system that ensures compliance with Federal consumer financial laws and regulations and addresses and prevents associated risks of harm to consumers.”

In other words, the CFPB holds your senior leadership accountable for your organization’s overall compliance. The agency believes the effectiveness of a compliance management system is grounded in the actions taken by its board and senior management.

Here’s what that means in practice:

  • Your board needs to demonstrate clear expectations about compliance, not only within your organization but also to your service providers.

  • Your board should adopt clear policy statements regarding consumer compliance.

  • Your board must appoint a qualified and experienced chief compliance officer who can hold other compliance officers accountable. Note that the CFPB recognizes that “in smaller or less complex entities where staffing is limited, a full-time compliance officer may not be necessary,” but, nonetheless, “management should have clear responsibility for compliance management and compliance staff should be assigned to carry out this function in a manner commensurate with the size of the entity and the nature and risks of its activities.”

  • Your board should ensure that your organization manages its compliance policies, procedures, and standards, through an established compliance function.

  • Your board needs to assess the compliance function to make sure your organization is mitigating potential consumer harm associated with violations of consumer financial laws and regulations, and allocate resources appropriately.

  • Your board needs to evaluate product development, marketing, account administration, and the way you handle consumer complaints for potential violations and risks to consumers.

  • Your board must mandate and review your organization’s regularly performed compliance audits.

  • Your board, or a designated committee of the board, should collect and analyze recurring reports of your organization’s compliance risks and issues, and how those risks and issues have been resolved.
Download theCompliance Audit Worksheet

How Your Board Can Demonstrate Its Commitment to Compliance,
Without Spending More Time and Money

That’s a long list of demands from the CFPB, isn’t it? Actually, many of the obligations detailed above overlap in an effective, end-to-end compliance management system, which can allow you take care of all of your organization’s regulatory requirements at once, eliminating waste and confusion.

The structure of your compliance management system should flow directly from senior management and board leadership.

Here are a few ways your organization’s decision makers can establish the template for your CMS and demonstrate (internally and externally) that your organization takes compliance seriously:

Set clear expectations about compliance and communicate them through policy statements to everyone in the organization.

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See How It Works

Automation: Better Compliance,
Not More Compliance

The same system that keeps your organization on track also enhances your board and insulates senior leadership from risk.

With an automated CMS, board members can rely on thoroughgoing, up-to-the-minute insight into compliance activities and outcomes across your organization. They’ll spend less time worrying about what might be happening, so they can focus on making things happen.

 

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Board of Directors Resources

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Compli is a great platform that integrates every part of the business, from compliance to operations to HR.
Julie Kim
In-House Counsel & Compliance Officer / Sierra Credit Corp.
Compli offers a great, purpose-built platform that assigns, tracks and monitors any workforce compliance activity – not just training. The platform can help any organization rein in its compliance processes and execute them more efficiently, consistently, and effectively.
David Wentworth
Principal Analyst / Brandon Hall Group
Compliance has never been optional, but there are a lot of companies in the past who have operated that way. In light of recent events, compliance has really stepped up in the last few years, so we really have to make sure all of our bases are covered and make sure we're always in compliance at all times.
Andy Page
Director of Operations / Road Auto Finance
The training was pretty flawless. You know, I've dealt with a lot of different third party vendors as far as software, and they're usually not very fun to deal with. Compli was very, very good. I was honestly shocked about how easy it was. I just answered a few questions, and everybody over at Compli just kind of took it from there.
Andy Page
Director of Operations / Road Auto Finance
All my employees know what the rules are and they know where the boundaries are, and they know not to step out of bounds. So my capital source feels much more comfortable knowing that my employees know where out of bounds is.
Andy Page
Director of Operations / Road Auto Finance
All policies, procedures, training material, and personnel files are in a central location, and the search function makes it easy to find any file in the system.
Julie Kim
In-House Counsel & Compliance Officer / Sierra Credit Corp.
Compli eliminated inefficient internal processes and enabled us to focus on actual business matters.
Julie Kim
In-House Counsel & Compliance Officer / Sierra Credit Corp.

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