Compliance burden increases 26 percent in third quarter

Rate of regulatory change sees largest uptick since 1995

NEW HAVEN, CT (October 15, 2014) — Community financial institutions saw a 26 percent increase in the number of hours and employees required to meet regulatory compliance demands in the third quarter, according to the latest Banking Compliance IndexSM (BCI).

The index, compiled and analyzed by experts at Continuity ControlTM, a New Haven, Conn.-based provider of a compliance management system for community financial institutions, found that the average community bank needed to devote 653 additional hours, or the equivalent of 1.86 full-time employees, to manage the 82 new regulatory changes added in the third quarter. To meet those needs, the average institution had to spend an additional $45,264 on compliance last quarter.

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“Anecdotally, most bankers say they felt like the third quarter was a light one in terms of compliance, but the data shows otherwise,” said Pam Perdue, executive vice president of regulatory insight at Continuity Control. “The number of regulatory changes last quarter reached the highest level we’ve seen since 1995. Even when the changes are minor in scope, they require time to identify, analyze, and implement.  Upticks like these historically have forced banks to add headcount and divert time, money and staff from more profitable areas. Those traditional responses are unsustainable in 2014 and beyond.”

Rising demand for compliance professionals is also a major factor in compliance cost increases, Perdue said. Regulators are placing greater scrutiny on banks’ compliance staffing, and as a result, compliance positions are becoming more expensive and harder to fill.

“We’re seeing competition for top talent increase,” Perdue said. “Knowledgeable complianceand risk officers are essential for most banks today, but they can be hard to come by. As a result, salaries keep rising, bumping already high compliance costs to even higher levels.”

Technology can help rein in compliance-related staffing costs, Perdue said, as well as demonstrate to regulators that a proper compliance management system is in place to keep up with the growing regulatory volume. Enforcement action levels remained high in the third quarter, with an average of seven items per action—up from just five items in the previous quarter.

“The regulatory community has raised the bar on what compliance staffing and systems should look like,” Perdue said. “Banks can no longer take a one-transaction-at-a-timeapproach. There needs to be a compliance management system in place, overseen by an involved board of directorsand managed by compliance and risk officers who demonstrate experience, expertise and competence in their roles. The data tell us that far too many institutions aren’t quite there yet.”

About the BCI

The BCI employs a data-driven approach to provide unique insights into the depth and breadth of regulatory compliance workload impact measured in terms of a Full-time Employee (FTE) Consumption Score.

The BCI is calculated each quarter using a multivariate analysis that can be weighted across different contexts and is calibrated to determine the regulatory impact on financial institutions of varying sizes, product mixes, and regulatory oversight. Using key indicators including volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and supervision and the enforcement climate, the BCI’s sophisticated metrics are unmatched in the industry.

The BCI tracks:

  • Regulatory Changes: A total count of applicable financial regulatory changes throughout the quarter.
  • Page Volume: The number of pages associated with each of the regulatory changes—indicative of the complexity and workload involved with reviewing, interpreting and implementing each change.
  • Enforcement Action Information (EA): Analysis of the volume and nature of public enforcement actions that have been issued during a quarter.

A recording of the Continuity Control RegAdvisor Quarterly Briefing webcast is available at

About Continuity Control

Continuity Control is a Compliance Management System (CMS) for community banks and credit unions that has been engineered to reduce the time, cost and risk impacts of regulation. This single, unified system automates the entire regulatory lifecycle –managing regulatory updates, policies, procedures, risks, vendors, audits, business continuity and exam preparation along with compliance strategy and planning. Built by bankers and former examiners, the system’s advanced software has been coupled with expert personalized service to help financial institutions quickly adapt to regulatory change, streamline the workload and ensure regulatory compliance. Continuity Control is endorsed by many state associations and is the ICBA Preferred Service Provider (PSP) for a Compliance Management System. For more information visit

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