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Survey Ranks Compliance, Risk Management as Top Lender Concerns

Wolters Kluwer compliance risk managementDespite regulators' pledges to work with lenders to help ease their regulatory concerns, a new survey shows worries continue to mount among executives at U.S. banks and credit unions.

In a report released Wednesday, Wolters Kluwer Financial Services (WKFS) said its Regulatory & Risk Management Indicator increased again to 128, reflecting a 28 percent rise since its baseline score established in January 2013. The indicator gauges top compliance and risk management concerns at hundreds of lenders nationwide.

Looking at compliance challenges, 72 percent of banker respondents listed "maintaining compliance with changing regulations" as one of their top concerns, up from 67 percent at the start of last year, while 69 percent said just keeping track of regulations is a major issue at this point.

Meanwhile, 71 percent said they worry about having to demonstrate compliance to regulators.

"Clearly, banks and credit unions are feeling increased pressure on their ability to comply with regulatory requirements and appropriately manage risk," said Tim Burniston, VP and senior director at WKFS' Risk & Compliance Consulting Practice.

On the topic of the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB), the combined Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) disclosure rule was the top concern, with 75 percent of respondents ranking it as a worrying issue.

Underneath that are the new reporting requirements CFPB demands under the Home Mortgage Disclosure Act (HMDA). Sixty-three percent of bankers surveyed listed the amendments as a significant challenge compared to just 46 percent in January 2013.

The top HMDA challenges cited by respondents were "amount of data to collect" (a response given by 30 percent of lenders), followed by "updating technology systems” (21 percent) and "accuracy of data collected" (19 percent).

"The rule changes will double to triple our workload ... HMDA already is one of the biggest compliance resource burdens on our bank," said one respondent.

When it comes to concerns about risk management, regulatory risk still ranked highest at 63 percent. Following in a distant second was IT risk at 45 percent—nearly double what it was in 2013.

As lenders work to respond to the increased regulatory and risk management challenges, resource management has also become a source of worry. According to WKFS, more than one in three respondents said they have hired additional help or transferred staff from other revenue-generating roles in the past year just to help manage growing risk and compliance requirements.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

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