13 Point Plan to Manage Significant Regulatory Corrective Actions
Significant regulatory corrective actions have the potential of being exceptionally disruptive. The financial cost of complying with a consent order or other formal or informal supervisory action can be considerable. These projects require time, resources and commitments from corporate officers and board members. As such, they can easily derail strategic plans by shifting focus to achieving compliance above all else, causing you to lose ground to your competitors.
In recent years, several high-profile consent orders received prominent media attention. One such case, related to a large savings bank, illustrates the challenges of achieving compliance. Over a period of three years, the bank was subject to three consent orders from multiple federal agencies including $150 million in civil money penalties and more than $10 million in customer restitution due to violations of law and inadequate compliance and risk management practices. Since at least 2019, the bank has been managing numerous corrective action projects related to various supervisory orders.
Whether the fines are large or small, managing supervisory corrective actions brings a unique set of challenges. In this point of view, Reference Point lays out some important considerations based on decades of experience leading multi-year corrective action initiatives. Our aim is not to lay out an all-inclusive playbook that details each of the legal, governance, technical and operational considerations that go into standing up a regulatory change program. Nor do we cover all the fundamental items we would expect to see in place in most initiatives, regulatory or otherwise, including adoption of a formal governance structure, use of communications plans, and risk and issue logs, to name just a few. Instead, we offer thirteen key things to keep in mind when managing a corrective action and building a corrective action framework.
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About Reference Point
Reference Point is a strategy, management, and technology consulting firm focused on delivering impactful solutions for the financial services industry. We combine proven experience and practical experience in a unique consulting model to give clients superior quality and superior value. Our engagements are led by former industry executives, supported by top-tier consultants. We partner with our clients to assess challenges and opportunities, create practical strategies, and implement new solutions to drive measurable value for them and their organizations.