For Phillips G. Gay Jr., compliance is more than a requirement. It is also a source of revenue.
The chief compliance officer at Bank of North America in Fort Lauderdale, Fla., set up a side business for the bank in compliance consulting last year.
So far, he has 15 customers, mostly small Florida banks, who rely on his 27 years in regulatory compliance to help them with problems.
"Compliance sells," said Mr. Gay, 45, who has made a name for himself as one of the most knowledgeable bankers in all areas of compliance. "It is an industry within an industry."
Indeed, Mr. Gay's double life of banking and consulting illustrates just how much of a business compliance has become. Already, scores of lawyers, software vendors, and consultants are hawking their wares to banks. Evidently, there is even room for a banker among the sellers.
"Everybody in compliance wears a lot of hats," said Mr. Gay. "I just wear them all at the same time."
This week, he has been wearing the additional hat of conference impresario, serving as chairman of the BAI Foundation's Bank Regulatory and Compliance Conference, in New Orleans.
Of course, not everyone could handle all these roles at once. Robert Chamness, executive vice president of CFI ProServices, says Mr. Gay is one of the few bankers in the business who has the expertise, sense of humor, and energy to take on consulting work..
"There aren't a lot of bankers who can do this and still service their banks," said Mr. Chamness. "It's not in his nature to let things go undone."
Mr. Gay, who is a senior vice president at Bank of North America, maintains that his role as a practicing banker gives him a decided advantage in the consulting business.
After all, what his clients mostly want are practical answers to specific questions.
Regulation Z, which implements Truth-in-Lending, is still baffling much of the industry, Mr. Gay said. Other banks ask for help writing policies and procedures and doing geoanalysis for Community Reinvestment Act compliance, he said.
Mr. Gay says he keeps the information he learns about other banks completely confidential, even from colleagues at his own bank.
The consulting practice, he acknowledges, could raise some concern among regulators. "Examiners are concerned that time outside the bank means time not spent inside the bank," he said.
Mr. Gay, however, says the $550 million-asset Bank of North America remains his top priority. If, for example, a client needed help filing Home Mortgage Disclosure Act information and Bank of North America's was due the same day, he would work on his own first.
Mr. Gay brings extensive experience to this juggling act.
At one time or another in the past 10 years, he taught every rule there is to teach at the American Bankers Association's compliance school. He's also a regular on the ABA's skylink educational network.
He even has trained the governments of Ecuador and the Slovak Republic on U.S. banking rules.
Thirteen years ago, Mr. Gay started the first compliance network, a group that still meets monthly to share regulatory problems, complain about examiners, and generally give each other support.
About 100 bankers attend the South Florida Compliance Association meetings.
In 1987, when working in Charlotte, N.C., at First Union Corp., Mr. Gay founded another group that meets by teleconference. Compliance networks have spread across the country since then, from California to New Jersey.
"Phil was one of the first people in compliance to professionalize it," said Lucy Griffin, principal of Compliance Management Services, Falls Church, Va.
Mr. Gay has been helped, she and others say, by a seeming ability to be everywhere at once. "I haven't figured out how his clocks work," Ms. Griffin said.
Helping other banks and keeping his own up to date has given Mr. Gay a firsthand view on how compliance has changed.
For one thing, he said, compliance officers get more respect now, because the consequences of noncompliance are more severe. There are simply more rules to get wrong, he said, and violating some requirements, such as the Community Reinvestment Act, may keep a bank from expanding.
As a result, compliance has gone from a low-level job to a management position at banks.
"I've never known of a successful program in compliance that hasn't had buy-in from senior management," said Mr. Gay.
A bad report card, he said, tends to elevate the matter to a senior discussion.
The regulatory atmosphere also means banks need more people to manage compliance. The biggest mistake community banks make, he said, is expecting one person to do it all.
At Bank of North America, Mr. Gay said, regulatory duties are doled out to most employees. Working compliance into the bank's business plan is the goal, he said.
Compliance isn't getting any easier, Mr. Gay said. Bank sales of investment products, especially mutual funds, will hold a slew of new regulatory problems for banks, he said.
And even if the Glass-Steagall act is repealed, the powers open to banks are bound to be regulated.
In fact, he predicted, the title of compliance officer may be obsolete within a few years. "Risk management officer" might be more appropriate, he said, adding, "maybe compliance has gotten too big for the compliance officer."
