The vast majority of compliance costs fall into five distinct categories for large depository financial institutions, with operations including call centers and IT being most costly. 

In an effort to measure the additional compliance costs to financial institutions of new regulations enforced under the Consumer Financial Protection Bureau, the agency conducted an in-depth study outlining the breakdown of costs for a sample of seven of the banks it oversees. 

The study included Regulation DD, which implements the truth in Savings Act; Regulation E, which implements the Electronic Fund Transfer Act; Regulation P, which covers privacy provisions of the Gramm-Leach-Bliley Act for which the CFPB recently changed its guidance; and Regulation V and the Fair Credit Reporting Act. 

Comprising the largest costs overall at a median of 23% were costs relating to operations including fulfillment and management of disclosures, error resolution and consumer interactions in call centers. The costs ran between 15% to 29% of total costs across the seven banks studied. 

Compliance costs relating to IT were the next most impactful, followed by human resources, compliance itself, and retail. 

“The Study is just one step toward understanding the effects of regulations on consumers and markets, and further, more direct research on these effects may face even bigger obstacles,” the Bureau wrote in its 100-plus page report. 

Further, the CFPB says it will use the findings of the study to reduce and avoid unnecessary compliance costs in the future. 

By improving our and the public’s capacities to describe and measure immediate effects of regulations on institutional operations, we seek to strengthen our ability to avoid imposing unnecessary operational costs,” the CFPB writes. 

Written by Elizabeth Ecker