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Continuity Control: Regulators Hit Community Banks With Stricter Enforcement & Even More New Rules


Oct 9 - The results of the third quarter Banking Compliance Index have been announced. The data, compiled and analyzed by Continuity Control, shows no sign of regulatory relief for the remainder of 2013 and a substantial increase in enforcement actions since last quarter, up 31 percent.

The BCI is the only quarterly composite index that empirically measures the incremental regulatory burden on financial institutions across key leading and lagging indicators. The index was designed to equip banking professionals, regulators and legislators with detailed data-driven metrics analyzing the impact of regulatory changes on financial institution resources, specifically budget and employee headcount.

"If the current rate of enforcement holds, over the next year 12 percent of the industry's financial institutions will be placed under new enforcement actions," said Pam Perdue, chief compliance strategist at Continuity Control and former federal examiner. "Community banks are facing increased regulatory demands, while at the same time, regulators are demonstrating a new focus on beefing up enforcement, creating one of toughest regulatory environments we've seen in 25 years."

The Q3 2013 BCI shows a drastic spike in compliance cost over the last year with the quarterly cost burden for an average institution to handle the quarter's regulatory changes increasing by more than 65 percent to over $43,000 for Q3 2013 compared to $26,000 for Q3 2012. The average financial institution would require an additional 2.34 full time employee equivalents to focus on managing the quarter's additive workload from regulatory changes, which is an increase from last quarter's 2.30 score. The significant escalation in compliance cost is due in large part to the staggering increase in both page count, which rose 62 percent from last quarter and the new enforcement actions, which totaled 202 for the quarter.

Earlier this year, several senators voiced their concerns for the insurmountable burden facing community banks at a Senate Banking hearing including Sen. Elizabeth Warren from Massachusetts, saying, "The impact on smaller financial institutions that can't afford to hire an army of lawyers to go out and interpret these rules turns out to be crushing."

However, community financial institutions have a choice when it comes to managing their regulatory programs, according to the experts at Continuity Control.

"This regulatory storm is much like any storm, where the affected have two choices: either prepare or pretend that the storm isn't actually coming," said Andy Greenawalt, Continuity Control's CEO and founder. "The BCI shows that the regulatory burden on banks is only increasing, and now regulators are also placing the totality of an institution's compliance management system under scrutiny. Hoping the storm will simply pass isn't an effective compliance strategy, banking executives must fundamentally change how they are managing compliance if they want to survive this regulatory environment."

About the BCI

The BCI is calculated each quarter using a multi-variant analysis that can be weighted across different contexts and is calibrated to determine the 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 employs a data-driven approach for unique insights into the depth and breadth of regulatory compliance workload impact.

The BCI tracks:

More than 600 financial institution professionals attended the Continuity Control RegAdvisor Quarterly Briefing webcast on Oct. 3. During this session regulatory experts reviewed the Q3 2013 BCI metrics and provided in-depth information on the quarter's regulatory changes, a workload assessment of these changes and the required actions to avoid penalties. A recording of this session is available at

About Continuity Control
Continuity Control is an award-winning regulatory compliance platform that combines advanced software with personalized service to help community financial institutions reduce their regulatory burden. Founded in 2008 by distinguished technology, banking, and compliance specialists, Continuity Control's platform effectively reduces the resources a bank or credit union must spend on compliance while ensuring that it passes regulatory muster. Built just for community banks and credit unions, Continuity Control is the most comprehensive compliance management platform for community financial institutions on the market today.