Remediation Projects and Complaints Can Present Huge Challenges to Financial Institutions – Be Sure to Consider Them in Your 2015 IT Budget

As a result of the Unfair Deceptive or Abusive Acts & Practices (UDAAP), Treating Customers Fairly (TCF), sanctions, Anti-Money Laundering (AML) and other regulatory rule violations, banks are spending tens of millions of dollars on large scale ‘look-backs’ of customer records, transactions and other data that could mean reconciling thousands or even millions of records. Regulators expect the banks to prove that a ‘look-back’ was conducted and remediation of records in response to their findings were completed. More and more FSIs and consulting firms are relying on technology that can help automate some components, ensuring a more cost-efficient, faster and fully auditable approach. FSIs are shifting from a fully manual approach of remediation and retribution to an automated one that provides a full audit trail for the regulators, all while minimizing costs, which can reach into hundreds of millions of dollars.

Complaints

Regulatory and enforcement bodies across the globe have focused heavily on consumer complaints. As an example, the Consumer Financial Protection Bureau (CFPB) in the U.S. has been taking complaints from consumers since 2011 and has helped provide approximately $4.6 Billion in relief and refunds to customers harmed by deceptive practices (UDAAP violations). Consumer complaints are being used as a key indicator by enforcement bodies to ensure consumer protection and ‘treating customers fairly’, while restoring integrity in financial markets. What does this mean for banks? Banks are required to not only ensure that they resolve consumer inquiries that become complaints within certain guidelines and timeframes, but to report the data to the CFPB or in the U.K. to the FCA, for instance. Due to the geographical variations regarding regulatory rules around complaints management, banks are now investing heavily in global systems. Implementing global standards improves internal controls and drives further business benefit such as reduced complaints and improved customer experience, while ensuring inquiries and complaints are handled in adherence to geography and line of business specific regulatory rules (timeframes, types, resolution).

As we gear up for the New Year, executive management within large global banks will continue to see regulatory compliance technology spend as a “must-have” item on their 2015 IT budgets and are starting to evaluate how they can drive business goals out of regulatory technology and spend, whether through automation of consumer complaints, remediation or through automation of rules to ensure consumers are treated fairly. With regulatory compliance spend significantly increasing, business benefits combined with risk mitigation are key to maintaining shareholder value when evaluating compliance technology.