Since the advent of the Consumer Finance Protection Bureau (CFPB) and its requirement for all collection agencies to have a compliance management system, compliance has become a line item in every company’s budget. But the additional cost burden has significant rewards – companies that make meaningful investments in compliance get ahead of the pack by winning more RFPs than their competitors.
If you are a small or medium sized company in this industry, you are probably grappling with the pros and cons of compliance vs. changing company practices to reduce regulatory risk.
To help you make an informed decision, let’s look at the costs of compliance and how these costs can be managed and mitigated:
- Client or Security Certification Audits –Audits are a time-consuming process for two main reasons – the length of the process itself (audit questionnaires, reporting, SOP and policy documents) – and the need for accuracy that requires double and triple checking relevant documentation. The manhours required in complying with audits can be daunting to small and medium sized firms who may not have the personnel or budget for these exercises.
Mitigation: Having a centralized compliance management system that automates workflows and provides instant access to previous audits, cross-departmental actions, and automatically generated reports can significantly reduce the man power needed for audits as well as ensure accuracy.
- Managing complaints -On an average, agencies receive disputes on 10% of their accounts, and complaints on another 5% of their accounts. Resolving a complaint can take several hours, especially if it spans multiple departments. It is estimated that Chief Compliance Officers spend 25% of the time on resolving complaints and disputes.
Mitigation: Automating the complaint workflow process can reduce the time spent by stakeholders more than 35% by directing complaints to the right officers and providing the tools for quick resolution of complaints.
- Training and Testing -It takes almost 50 hours of the collection supervisors’ or compliance officers’ time to manually train, test, and score employees to understand your policies, procedures, client requirements, and regulations. Testing also helps in identifying gaps in training that help reduce potential risks to the company.
Mitigation: Creating online training modules not only makes them accessible to employees at their convenience but also helps you track of completion of requirements and certifications.
- Maintaining Policies & Procedures –As regulations change periodically, it takes substantial manpower and supervision to make sure that regulatory changes are disseminated company-wide and every employee is up to date on the changes.
Mitigation: Centralized compliance systems allow changes to policies and procedures to be disseminated within the company instantly and can also help track acknowledgment of changes by employees.
IPACS® (Integrated Performance Audit and Compliance Software) is a powerful SaaS compliance management system that automates and centralizes key compliance tasks and can help you manage these 5 major costs of compliance. Let us know if we can help in mitigating compliance challenges for your company.