1SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Pam Perdue Pam is a distinguished regulatory expert with over 20 years of experience in compliance. In her career, Pam has served as a chief compliance officer, an educator and consultant for … Web: www.continuity.net Details Community financial institutions (CFIs) saw some regulatory relief last quarter, but by itself, the slower pace of enforcement doesn’t signal a reason to celebrate. The reality is that the sustained increase in regulatory volatility may be making compliance harder for some institutions.According to Continuity’s Banking Compliance Index, regulatory agencies issued just 150 enforcement actions against financial institutions last quarter, dropping the enforcement rate below 10 percent for the first time since 2014. Yet, just two quarters ago, the enforcement rate hit a record high of 12.9 percent.The swing is indicative of an increasingly unpredictable regulatory climate. After several quarters of large and steady increases following the financial crisis, the number of per-quarter regulatory changes issued since 2014 has varied from 125 to 61. The number of full-time employees needed to manage the changes each quarter has ranged from roughly one to nearly three. Trying to manage resources appropriately in a climate that varies so much each quarter can be maddening for even the best-run institutions.The fluctuations are due, in part, to the fact that CFIs aren’t the only ones playing catch-up. Regulators are still incorporating new rules into their evaluation processes. As such, they may be temporarily less likely to crack down on CFIs that are struggling to do the same. The upcoming elections are also having an impact – as lawmakers slip into campaign mode, they may be less focused on regulatory initiatives. Similarly, the Federal supervisory agencies also tend to take a “wait-and-see” approach during election cycles. Some agencies, like the CFPB, are finding themselves under fire, making their future rulemaking and enforcement postures tough to predict.How can CFIs best adapt to this new environment? The following three steps can help.Rethink traditional staffing models. A volatile environment makes compliance staffing a challenge. While your team might be sufficient one quarter, its members could quickly become overwhelmed the next. CFIs can build in more flexibility by embracing alternatives to traditional staffing. Consider part-time or contract workers to outsource some duties. Also explore compliance management systems that leverage technology and automation and can better flex up and down with conditions, to deliver compliant outcomes more effectively.Systematize. Many CFIs still don’t have standardized compliance processes in place, handling each regulatory change manually and individually. This approach might be sufficient in extremely slow quarters, but it will likely cause significant problems during periods of rapid change. For example, many institutions are being cited for violations of decades-old regulations because, while trying to keep up with new changes, old processes are falling through the cracks. Technology is often the best solution. Established procedures, automation, and reporting can lighten workloads as well as reduce the potential for human error.Allocate adequate resources. Despite a more sporadic pace of new regulation and enforcement, the regulatory burden is nonetheless cumulative and increasing. Even in slower quarters, absorbing dozens of new regulations is no easy task for a credit union. Yet many institutions continue to treat compliance as an afterthought, or as something that will disappear “if only” there’s a new administration or “if only” complex rules get unwound. Relying on such hopes, especially when they’re unsubstantiated by the data, is bound to create problems.Most experts agree that CFIs are likely to see their regulatory burdens grow for years to come. Even if cumbersome rules get modified or repealed, that will only mean more work to “un-do” what was previously implemented. On the bright side, institutions that have adapted to this reality—by hiring compliance officers, adopting compliance management solutions, and leveraging technology—are well positioned for success.As the regulatory environment remains in flux, it’s more important than ever for CFIs to re-examine their compliance processes. Institutions that take the time to put repeatable and trackable (or reportable) processes in place will be better able to cope with change, whether it comes slowly or all at once.