A regulatory learning framework for Banking & Securities
It only takes a quick web search of regulatory penalties in the Banking & Securities industry to get a sense of the lay of the land. Regulators are scrutinizing financial institutions around the world and levying heavy penalties for violations and noncompliance.1 Global banks have paid more than $235 billion in fines to regulatory authorities over the last several years.2 In response, financial institutions have been searching for ways to shore up their compliance capabilities. The Regulatory Learning Framework, developed in conjunction with learning, compliance, and risk executives from leading financial institutions, provides guidance for banking and securities organizations to assess their current learning strategies and identify opportunities to improve the delivery and effectiveness of compliance learning programs.
More regulations, more complexity
Banking & Securities organizations have been subject to high volumes of regulations originating from various sources across the industry. A few of these include the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration. The increase in regulations poses a range of challenges for the industry, including more complex reporting requirements, greater scrutiny from regulators and the public, and the corresponding reputational risk in the event of publicized violations. As a result of infractions, some institutions are even assigned on-site monitors who report to the regulatory body and closely scrutinize an institution’s processes and activities to reinforce and assure compliance.
Learning organizations are under increasing pressure to help the broader organization meet its compliance obligations, often sharing responsibility with the institution’s compliance and risk functions. What regulators expect to see is not always clear cut; it has become less a matter of reporting X many hours of compliance training delivered to Y numbers of employees, and more evidence that the learning “sticks” and is effective at improving compliance. Many institutions have been struggling to stay ahead of the regulations and mount a coordinated compliance response that harmonizes the needs of the business, learning, and regulatory subject matter experts. Significant resources are being diverted to compliance, sometimes resulting in duplicative effort by the organization and even higher compliance costs.
A framework built around leading practices
Against this challenging industry backdrop, Deloitte professionals and learning, compliance, and risk executives from leading banking institutions held roundtable discussions in 2015 to share their experiences and discuss strategies for addressing compliance in a holistic and proactive way. Out of these roundtables came the Regulatory Learning Framework—a proposed methodology for assessing an organization’s compliance learning structure and enhancing it with the addition of leading practices. The Framework includes three core activities, which are the foundation for compliance learning, and three differentiating activities, which provide the opportunity to create a tailored program.
The Regulatory Learning Framework
Applying the Framework can give organizations the means to:
- Synthesize inputs from various lines of the business into compliance training strategy
- Improve access to learning effectiveness results, and gain a deeper understanding of their significance
- Identify areas where employees need further learning reinforcement
- Deliver compliance training through multiple approaches in a streamlined and cohesive manner
- Achieve more relevant, targeted, and compelling compliance training courses
- Potentially reduce exceptions and/or fines and increase communication with regulators
Our recent publication, Regulatory Learning Framework: Optimizing compliance learning strategies to mitigate risk, covers the Framework in greater detail and offers insights for applying it. Use it to understand how leading organizations are addressing compliance learning and practical steps you can take to improve your approach.
1 This study by the Deloitte Center for Financial Services, Enforcement actions in the banking industry: Trends and lessons learned, gives an overview of the regulatory climate.