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[Survey] Most banks highly concerned about TRID, HMDA compliance

Wolters Kluwer report shows banks’ concern over compliance is rising

Given the current regulatory environment, it’s not a stretch to suggest that banks need to be worrying about how to remain compliant with the various rules they are required to adhere to.

With each new rule that’s released, banks face an additional set of compliance challenges that must be met, and a new survey from Wolters Kluwer Financial Services shows just how concerned banks are by those new compliance challenges.

The latest edition of the Regulatory & Risk Management Indicator survey from Wolters Kluwer showed that 86% of the banks surveyed said that achieving compliance with the new TILA-RESPA Integrated Disclosures rule from the Consumer Financial Protection Bureau is their top regulatory challenge.

Another top concern is the CFPB’s new reporting requirements for banks as part of the Home Mortgage Disclosure Act, which can be read here.

According to the Wolters Kluwer survey, 64% of respondents cited the task of accurately capturing the new HMDA data fields as either their first or second biggest obstacle in complying with the new rules.

Additionally, upgrading their systems to accommodate the new HMDA requirements was rated among the top two concerns by 42% of respondents, with 39% viewing staff training — and 33% citing the time and costs associated with implementing a regulation of this magnitude — as one of their top concerns.

Conducted in August 2015, the Wolters Kluwer Indicator generated 539 responses among banks, credit unions and other lenders.

To calculate the Indicator scores, Wolters Kluwer used 10 main factors, seven of which revolve around direct input from banks and credit unions on their top compliance and risk management concerns, and three of which are based on regulatory data the company compiles.

Overall, concerns about regulatory compliance and risk management challenges rose 7% compared to last year’s Indicator results. Concern over the CFPB’s rulemaking authority generated a 78% rating, up 2% from the previous year’s results.

“The continuing upward trajectory of concern shown by banks and credit unions closely correlates with the growing level of angst we’ve witnessed while helping clients the past year across a range of issues — including TRID preparation — with other major regulations such as the Home Mortgage Disclosure Act data collection rules looming on the horizon,” said Timothy R. Burniston, executive vice president, Wolters Kluwer Financial Services. “Their concerns reinforce the need for instituting thoughtful, proactive regulatory change and risk management practices to help address these mounting challenges.”

When asked about complying with the complex TRID rules, 32% of respondents cited “collaborating with stakeholders,” while 24% identified “last-minute changes that trigger closing delays” as the top anticipated challenges. Another 17% viewed “information technology preparedness” as the top challenge in complying with TRID, while 18% were unsure about the regulation’s greatest impact.

Despite the continued increases in overall anxiety levels, staffing investments to bolster regulatory compliance and risk management efforts declined slightly, with 22% of respondents indicating their organizations had moved staff during the past year from revenue-producing roles to help address new regulatory requirements — a 7% decline from 2014 — and another 21% citing they had increased staffing levels to help manage risk, a 13% decline from last year’s results.

When asked about escalated risk priorities for 2016, 66% of respondents cited cybersecurity as their top concern. Increased cybersecurity anxiety was followed by regulatory change management (49%), third-party risk (30%), and fair lending compliance (29%) as top levels of concern.

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