This blog explores the impact of recent leadership changes at the US government’s financial services regulatory agency on compliance requirements at US firms—such as the Department of Labor (DOL) Fiduciary Rule training.
The Consumer Financial Protection Bureau (CFPB) has hit the headlines recently as the Trump administration begins to act on election promises to roll back regulations. But what does it mean for compliance efforts at your organization?
The leadership changes at the CFPB were the subject of legal action as President Trump appointed an Acting Director, Mick Mulvaney, while the current Deputy Director, Leandra English, went to court to assert her right to the position. As it now stands, the court has rebuffed English but the episode has left a sense of turmoil at the agency.
The CFPB was brought in under the Obama administration to regulate the U.S. financial industry following the 2008 financial crisis. It governs a range of regulations as part of The Dodd-Frank Act. These regulations are aimed at regulating financial institutions and protecting consumers.
Fiduciary Rule Training: Don’t Pop the Champagne Cork Quite Yet
While news of deregulation may be looked on positively by Wall Street, LEO GRC's Scott McCleskey warned against potentially premature celebrations.
In a recent interview for Thomson Reuters, Scott predicts that any changes to regulations are likely to take time to be enacted, if they happen at all. Additionally, if changes are made, it won’t necessarily mean that organizations are ‘off the hook’. Individual states in the US may move to fill in the gaps and use their powers to push back on efforts to lessen regulatory controls.
But essentially, says Scott, regulatory change in some form is coming—albeit not quite yet.
So where does this leave compliance officers right now?
Fiduciary Rule Training: Don’t Get Left Behind
Although the immediate reaction to this news may be to scrap or halt any current training efforts devoted to compliance of certain regulations, particularly the recently introduced DOL Fiduciary Rule, it’s far too early to make such grand gestures.
While the waters are muddied, Scott recommends keeping on with any current and upcoming compliance training commitments.
The first part of the DOL Fiduciary Rule, concerning Impartial Conduct Standards, came into effect in June of 2017. However, many organizations have still not taken action to train staff, despite the fact that the six-month implementation period has now come to an end.
Scott advises that lagging behind on Fiduciary Rule training could lead to problems further down the line, if the finer detail of the rule is given the go-ahead. It can take at least six months to review, write and implement new compliance policies within organizations. So, if you’re behind now, you’ll be even further behind if you hold out any longer.
Be Proactive, Not Reactive, With Fiduciary Rule Training
Ultimately, the best approach to dealing with these uncertain times is to change your thinking completely. Become proactive, not reactive.
Scott reflects that, instead of reacting to rules, organizations should consider compliance as a key tool in risk management and take proactive, strategic steps to manage their public reputation. When organizations implement their own standards and controls, they can anticipate change in regulations and demonstrate a strong public commitment to secure, fair and accountable business conduct.
While compliance regulations will come and go, your approach to risk management should remain constant.
Watch Scott’s interview for Thomson Reuters in full below.