The Cost of Being Compliant

The Banking Compliance Index (BCI), a quarterly tracking index published by the Regulatory Operations Center, was released Tuesday revealing how much financial institutions are spending on compliance costs. Hours spent analyzing and implementing new regulation increased 36 percent since the start of the year and by 27 percent since Q1 of 2017. This resulted in $13,925 of cost for the average $400M institution, probably due to changes in enforcement actions, which total 71 during Q2 2017. According to the report, this accelerated the enforcement rate a full point over Q1 2017 to 4.85 percent.

“This minor movement is nonetheless significant, because it indicates that the "Trump effect" may be less impactful than first believed,” the report stated. “It's possible that both stats may have been driven upward by a "return to business" in Washington, D.C., which happens in any new administration after the dust settles on the initial transition period.”

There has been more than 1500 pages of new regulation since July 1, according to the report, and with top agency posts still to be determined, more could be coming in the third quarter.

“Our Banking Compliance Index is a significant indicator of the regulatory environment, quarter by quarter,” said Mike Nicastro, CEO of Continuity. “These shifts toward the increasing cost of compliance this quarter serve as a leading indicator that the governing bodies are beginning to accelerate the issuance of new regulations and that there may be further increases in activity in the months to come.”

To see the full report, click here.