"New Year’s Resolutions"
Contributed by Blair Rugh, Trinovus
I dislike New Year’s resolutions. Their usual purpose is to cause you to change some lifestyle pattern that you enjoy to something that you will not enjoy as much but is better for you. I used to make New Year’s resolutions. Normally, I had broken most of them by the time I went to bed New Year’s night. Thinking back, most of my New Year’s resolutions had something to do with limiting my food intake. That resolution normally did not make it past lunch. Put a cookie between me and a resolution to diet, the resolution does not have a chance. I have the willpower of a parakeet. But on to more serious issues than my waistline.
If you are in charge of compliance in your organization, make the following as commitments to yourself, not as resolutions. Commitments to yourself are a lot more serious than resolutions because if you don’t keep them you are letting yourself down.
First, make a commitment that you are going to keep the management of your institution better informed about upcoming regulatory changes and the potential impact that those changes may have on the institution and its products. There will be a lot of regulatory changes in the coming year. Some may not have much impact, but some will have a significant impact. Provide management as much advance notice as possible as to what is coming so the members of management can do their planning and make any adjustments that have to be made to accommodate the change. For our part, we will use this column to make you aware of all coming regulatory changes and our analysis of the impact that they will have.
Second, and this is something that I suggested in a prior column, each month think of one compliance related way to either increase your institution’s revenue or decrease expenses and present the idea to your institution’s management. Unfortunately, compliance is a cost center; therefore, does not get the same attention as the profit centers. That is the way that it is and the way that it will always be, but if you can show that there is bottom line potential in compliance if it is given the requisite thought and attention, you do have the opportunity to elevate its status as well as your own. In my previous article, (you can find it on our website) I suggested you review how you calculate your time deposit penalties, what you are mailing, the cost of the mailing, and how to charge interest during the rescission period on rescindable loans. If you didn’t give those ideas much thought, rethink them as they will give you a three month head start.
If you did not like those ideas here are a few more. If you do portfolio real estate secured loans where you require private mortgage insurance, rather than having the customer purchase the insurance, purchase it yourself and increase the interest rate by a like amount. Tell the customer you are doing him or her a favor because he or she can take a tax deduction for the extra interest but cannot for the PMI premium. For your part, take a look at the loan in two or three years and if it is solid, consider canceling the PMI and increasing the revenue from the loan.
Next, find a way to get more of your customers to agree to receive their periodic statements electronically. Figure out what it costs to prepare and mail a typical checking account statement. When you include all of the costs you will be surprised how expensive it is, particularly versus the nominal cost of presenting the statement electronically. You will find you can offer the customer a pretty strong incentive and still come out with the long end of the stick.
One thing I don’t recommend is waiving fees for customers that receive electronic statements. The fee waiver goes on forever. I would rather give a $50 initial incentive or something else substantial and then have the revenue stream. Now, you have five ideas. Surely one of them, or a modification of one of them, will work in your institution.
Finally, the third commitment to yourself. This year don’t stress out. Compliance is stressful. Believe me, I know. But, some compliance people that I know create a lot more stress than is necessary. A little stress is probably a good thing if our reaction to it is appropriate and it causes us to get more done. A lot of stress is not a good thing. Too often we focus on the stress rather than getting the things done that are causing the stress in the first place. If you are one of those people who is under continual stress, share that with your manager. Tell him or her that there is only so much that you can do and that from here on, you are going to do what you can, but you are not going to fret about what you can’t get done. Hopefully, that will get you more help or some relaxation of responsibility.
Whatever commitments you make to yourself, we hope that you have a great New Year. For our part we commit to you to provide the finest compliance service that we know how. We have big plans for this year to continue to expand our service so that it will be more useful and valuable to you. We look forward to working with you during the New Year!