Consumer Lending Compliance – United States
With increasing importance in the non-banking financing sector, consumer lending organizations are coming under the radar of various federal and state governing bodies. They should ensure they provide accurate disclosures in compliance with laws and ensure to maintain adequate documentation.
The Importance of Consumer Lending Compliance
The US consumer lending industry is continuously growing with almost an annual revenue of ~$37 billion. With the ability to bridge the gap in lending to underserved people and dealing with riskier lending opportunities, consumer lending organizations need to integrate a culture of compliance in business.
The Top Challenges to Consumer Lending Compliance
Compliance issues can seem overwhelming to consumer lenders, especially when dealing with a public crisis like the pandemic on top of day-to-day duties.
The primary compliance concerns & the regulatory issues are:
The primary compliance concerns & the regulatory issues are:
- Maintaining compliance with consumer laws
- Difficulty meeting timely disclosure requirements
- Defending against cyber attacks
- Safeguarding personal information
- Controlling the costs of compliance
- Prevention of money laundering
Result of Consumer Lending Non-Compliance
Failure to comply with federal and state requirements can result in enforcement proceedings.
Non-compliance will lead to civil money fines, litigation, and consumer compensation.
The cost of non-compliance can range from tens of thousands to millions of dollars.
Generic Solution to Avoid Consumer Lending Non-Compliance
Having a consumer lending compliance system will help save valuable staff time and provide peace of mind. Organizations should emphasize compliance and a desire to be more strategic in their approach.
Consolidate Data and Set up Compliance Frameworks
Establish a structured set of guidelines and frameworks that’s applicable to your business and ensure their control system is functioning effectively as intended.
Create the Decision-Making Engine
Gain better insights into their current set of risks and security posture – and instil modern tools that empower them to be efficient, agile, and collaborative.
Create a Scalable Compliance Infrastructure
A scalable compliance infrastructure help lenders assess the entire portfolios and identify risks. A modular platform that can be customized flexibly can meet a very wide range of needs and compliance frameworks.
Evaluate Lending Models and Ensure They Are in Good Shape
Lending presents a variety of risks – compliance risk , marketing risk, steering risk, underwriting risk, pricing risk, and servicing risk. Establish robust controls to address the weaknesses in your compliance management system.
How VComply Can help with Consumer Lending Non-Compliance
VComply helps you to map your compliance obligation with controls, assess risks, analyze the status of obligations, and remediate compliance issues.
Centralized Platform for all Compliance Activities
- Bring the diverse teams on to the single collaborative platform.
- Measure compliance posture and track activities.
- Workspace for consolidating controls specific to a compliance program
- Alerts and notifications to update the compliance task status
Compliance Process and Task Design
- Setup or import frameworks and controls, and identify tasks required for meeting standards.
- Establish compliance task library to map obligations to controls.
- Create tasks that correspond to controls that address risks.
- Automate compliance tasks and activities.
Compliance Reporting
- Track the status of compliance tasks in real time.
- Automatically generate compliance reports that provide a 360-degree view of the compliance posture.
- Gain finer insights on compliance data and risk posture to help teams make better decisions
- Proactively plan and stay prepared for future compliance requirements.
Compliance Risk Management
- Define a plan for risk management and communication across the team.
- Define the corrective action planning for crisis management.
- Proactively create risk mitigation plan and automate the processes.
- Provide real-time insights into risk status with dynamic dashboards.
