With President Trump taking aim at Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other financial laws, what should organizations be doing to prepare for regulatory change?
Keeping pace with the flurry of activity in the Trump administration is no easy task, but from a business standpoint indications are that the President intends to weaken or eliminate financial regulations in order to bolster the U.S. economy.
The planned changes will rewrite the legal landscape in which companies conduct their business in the United States and abroad.
Regardless of how this is achieved, it’s essential that companies know how to monitor the changes in regulation, measure their impact and ensure accountability for implementing the necessary controls.
Accordingly, there are steps that organizations should consider for a well-defined and documented regulatory change-management process.
Trump’s reform plans
While it is hard to gauge exactly what will happen and when, there are a number of possible outcomes for The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act):
- Replace the Dodd-Frank Act with the Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs (Financial CHOICE Act) as proposed by Jeb Hensarling, Chairman of the House Financial Services Committee.
- Weaken or replace a key component, the Consumer Financial Protection Bureau, by renaming it the Consumer Law Enforcement Agency and allowing the President to appoint and fire the director.
- Giving Congress control over the agency’s budget. If Republicans continue to control Congress, expect them to defund the agency through a reconciliation vote as part of efforts to eliminate the agency.
- Weaken or eliminate Volcker Rule, the de facto ban on proprietary trading.
Republicans in the House of Representatives have recently approved the Financial CHOICE Act bill, which will next go to the Senate for consideration. This is where the debate over Dodd-Frank is expected to intensify.
House passes bill to replace Dodd-Frank Wall Street reform law https://t.co/LOojVnHXrg
— Reuters Top News (@Reuters) June 8, 2017
While there is general agreement that Dodd-Frank needs improvement, supporters will point to the Act’s ongoing support of investor protection as the basis to maintain it.
How to respond?
Watch video — Introduction to Thomson Reuters Regulatory Change Management
Here are 10 recommendations that will help ensure a comprehensive and streamlined approach.
- Scope. Define the regulatory changes to be covered. For example, new and amended regulations and legislation, regulatory guidance, news and circulars, comment letters, enforcement actions, and regulator speeches.
- Taxonomy. Catalog the regulatory areas that impact the organization to help develop and maintain your process.
- Library. Group laws and regulations into subject area buckets that are relevant for your organization.
- Roles and responsibilities. Identify key roles (administrator, experts, users, and recipients) to help manage and run the process.
- Data Sources. Identify the best sources for providing feeds on ongoing regulatory developments and changes (e.g., regulator websites, law firms, consulting firms, newsletters, and blogs).
- Meta Data. Define the minimum content needed to assess regulatory changes such as: the title of the law/regulation, highlights, key dates, and compliance measures.
- Workflow. Map out the framework for your process, routing to subject matter expert review and analysis, identification and implementation of remediation measures, and execution of tasks.
- Reporting. Define reports, key performance indicators, and notification process to help gauge what has been reviewed, is getting done or not getting done.
- Integration. Map results of the process with key internal controls (policies, audits, monitoring and testing).
- Maintenance. Assess your process periodically to make sure it is current and still relevant.
Once the process is defined, organizations should consider an integrated technology solution.
In fact, the most effective regulatory change management models are part of a governance, risk, and compliance (GRC) strategy that is automated.
It is possible to integrate such a model into current software operations by seeking out a provider that best matches the business’ structure, products, clientele and risk profile.
Watch video — Can an automated solution bring value and insight to your regulatory change management process?
An automated approach promotes transparency and collaboration across the organization and helps compliance teams to:
- Identify, monitor, assess, and manage risk across the organization in a single integrated solution.
- Align GRC processes with ongoing regulatory changes.
- Leverage GRC data to set priorities across the organization.
- Support decision-makers with dashboards and reporting.
Lastly, remember that in the context of the regulatory change management process, automated models enable organizations to be more effective and efficient.
This comes from being proactive in gathering, organizing, assessing, prioritizing, communicating, addressing and monitoring regulatory changes.
Crucially, it means experts have more time to consider impact analysis and can focus on their responses to regulatory changes, rather than dealing with data collection.