Growing regulatory compliance burdens have led nearly half of banks to reduce their offerings of financial products and services, according to ABA’s biannual Survey of Bank Chief Compliance Officers. A combined 46.3% said their banks had cut offerings for loan accounts, deposit accounts, both, or for other services — up slightly from 2011 and 2013 and up substantially from the 21.9% who reported exiting a product line or channel due to regulatory burdens in 2009.
Meanwhile, nearly 46% of chief compliance officers said their banks had either decided not to launch a product, open a new channel, or hold off on entering a new market or had held off while determining the regulatory effect.
For example, the Ability-to-Repay Rule has led one-third of banks to turn down otherwise creditworthy mortgage borrowers, according to the survey. An additional 20% said they were not sure. The rule’s impact was felt most by banks with between $1 billion and $10 billion in assets, of which 42.5% said the rule had limited credit. About one-third of banks are exclusively making Qualified Mortgage loans.
The survey covered trends in compliance outsourcing and third-party systems. Nearly half of banks have outsourced at least one compliance obligation; of these, 76.9% outsourced the compliance audit function, 46.3% outsourced fair lending reviews and 22.3% outsourced UDAP/UDAAP reviews. Large numbers of bankers reported using third-party software or systems to handle Bank Secrecy Act, Home Mortgage Disclosure Act and foreign sanctions requirements.
A little over half of banks have one to five compliance FTEs. At banks with under $100 million in assets, two-thirds have one FTE or fewer. Just over 55% say compliance budgets have risen since 2013, mostly due to hiring more staff and handling a growing regulatory burden. Especially at smaller banks, compliance chiefs are also likely to serve as CRA officers, BSA officers and chief privacy officers.
View the survey results.
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