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Compliance training comes of age


Whether you view it as a necessity, or a necessary evil, there’s no getting around the fact that from all angles, compliance is expensive. Most estimates that account for the staffing, policy creation, process changes, technology and training costs put the annual expense for the financial services industry around $270 billion. And with staffing for compliance across the industry almost doubling within the past five years, compliance expenses continue to increase.

And yet, non-compliance costs even more. In January 2017, Deutsche Bank was fined more than $200 million by British regulators for its role in a $10 billion Russian money-laundering scheme. That’s a steep fine, but not as much as the SEC levied against Citigroup in 2011 for defrauding investors: $285 million.

The message in 2019 remains clear: Compliance is a must-do and compliance education a must-have. Yet since it’s often treated as a burden, many organizations handle it with a “check-the-box” mentality.

Indeed, it’s rare to find leaders in the financial services sector approach compliance with a smile. No wonder some mortgage professionals perceive compliance training as a time-consuming process and thus focus on learning just enough to merely pass the course exams.

But are mortgage professionals who merely jump through hoops equipped to handle real-world tests? Gambling on the answer puts the reputational and financial costs of your organization at great risk.

A shift in compliance culture

BAI is starting to see a cultural shift where more organizations take advantage of compliance training’s benefits. Since regulatory requirements impact every role in the organization differently, many mortgage companies are moving to a decentralized model. Instead of throwing compliance concerns in the lap of the compliance officer, employees are trained to truly “own” compliance and understand its day-to-day role.

Why is this crucial? Competitive advantages, for one. Taking on efficient, effective training that encourages teams to innovate together opens the door to establish higher trust levels within the organization—and with consumers because, at its core, compliance helps mortgage professionals succeed while it acts in the best interest of the customer.

Meanwhile, the industry continues to face an increase in threats, from identity theft to cybercrimes and more. According to a 2018 industry study by Accenture, the average number of security breaches per company more than tripled over a five-year period, from 40 in 2012 to 125 in 2017.

Still it’s understandable that concerns over return on investment remain. Leaders need a clear understanding of what the investment is expected to achieve. Mortgage professionals should ask themselves, “What are our compliance training goals, and what is the benefit of achieving those goals?”

Recommendations to rev up compliance training

1) Identify your compliance goals.

Do you want to significantly reduce training time in a responsible manner? Or handle customer complaints and employee mistakes efficiently? Define what you you’re your compliance priorities are for the organization so you can build a program that works toward those goals.  Avoid focusing on the alphabet soup of specific, individual regulation changes in areas from AML to Regulation Z (and that also revolve around TRID, HMDA and BSA) as a one-off. Look holistically at your compliance program and plan accordingly.

2) Examine the data you have.

Much can be learned not just by asking the right questions but also gathering data from the answers where possible. How long do employees spend on average taking compliance courses? Which areas of weakness exist and can be addressed? What do auditors say regarding your compliance standing? Which process errors or crime can you prevent? By looking at and understanding the challenges, leaders can align the compliance goals with the findings. Quantifying the value of the findings reveals the monetary value connected to reducing problem areas.

3) Implement new training techniques.

Here, role-based courses prove especially valuable. Courses that zero in on the regulation elements employees will encounter daily in their specific roles reduces training time, increases productivity and minimizes risk. BAI has seen up to a 30% percent training time reduction at organizations that implement role-specific training into their compliance programs. By incorporating this approach in their compliance program, leaders will see a significant impact on their ROI.

4) Train and re-train.

Your leadership team may struggle to strike the right balance between providing enough teachable training and requiring too much—which can cause information overload and lower retention. Make it your ultimate goal to maximize compliance training by seeking informative, engaging courseware for employees.

Parting thoughts: From fear to confidence

It’s true that no organization wants to assign too little training; be non-compliant; put the organization at risk of mistakes; generate customer complaints; fail a compliance audit; receive regulator fines; or weather any bad publicity associated with these issues. But compliance is not something to fear or work around. Smart organizations can embrace and embed it into every area and in an ideal compliance world, leaders lead by example: They demonstrate that compliance is everyone’s responsibility.

That sense of responsibility begins when mortgage professionals adopt the right tools and practices for training. And when that training is efficient, effective and connected to a higher purpose as it pertains to your mission, employees exude confidence to make the right decisions, protect the organization, provide superior customer service and impact the bottom line with top-rate results. Market leaders that put these insights to use know this, and they’ll tell you: You don’t need any training program to grasp the benefits.  

Edward Marcheselli is managing director at BAI.

BAI gives financial services leaders confidence in managing compliance and a passion for professional development by providing powerful tools and subject matter expertise you can rely on. Learn more.