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 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.
- Client Audit Remediation – Remediation requests generated by clients often involve more than one department or collecting officer and require at least 50% of the time spent on audits themselves.
Mitigation: An automated compliance management system cannot only ensure that remediation requests are immediately accessible to right department or employee, but having a system that is designed to flag compliance issues also reduces the need for remediation.
- Managing complaints - On an average, companies receive disputes on 5-6% of their accounts, and complaints on another 3% 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: Doing trend analysis on complaints to identify the root cause can reduce the no. of complaints marginally while 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.
If you would like to know how your firm stands with respect to your peers in terms of your compliance framework before deciding on attending the conference, or investing in an external compliance system like IPACS, click on this link to fill out a simple form and Provana will send you a compliance benchmarking report.