WASHINGTON -- Compliance officers think their bosses don't understand what they do or why it's important.
"Sometimes the only way you can get their attention is hit them in the face," said Chuck Lewis, vice president and compliance officer of United Missouri Bancshares, Kansas City.
Gathered here last week for the American Bankers Association's National Regulatory Compliance Conference, bankers groused about chief executive officers at sessions covering everything from fair lending to advertising.
The ABA invited top executives to the conference for the first time. The four-day event drew a record 500 attendees, including 51 CEOs, presidents, and executive and senior vice presidents.
While complaints were flying, there also was constructive discussion on how to better educate executives.
Margaret McKenzie Causby, senior vice president and compliance officer at Old Point National Bank, Hampton, Va., said it is the compliance person's responsibility to discuss problems with the executive. "Don't wait for management to come to you," Ms. Causby said.
A good way to grab top executives' attention is to drive home the fact that examiners will focus on how involved senior managers are in regulatory compliance. This involvement will factor into the bank's performance rating.
That understood, the compliance officer should then give a rundown of possible penalties, not just for noncompliance with high-profile requirements like the Community Reinvestment Act, but for everything, including flood insurance.
Mr. Lewis said most executives don't have a grasp on the trouble they could face. "I don't mean they're stupid," he said. "I mean they don't have the knowledge. Educate them now."
Once the officer has the car of his manager, said Mr. Lewis, it is important to document what is said. If a problem is found in a compliance program, penalties may be reduced if the bank can prove the issue was addressed.
"Write down everything you discuss with senior management," Mr. Lewis said.
He also suggested going to a number of managers with concerns and suggestions, rather than counting on one person.
It is important for senior management to understand that the compliance officer must be informed of major changes in the bank, in order to protect it, said Mr. Lewis.
Compliance officers should be at every meeting in the bank that could affect compliance.
"You don't have to dominate all the conversations," Mr. Lewis said. "But you have to be in on new advertising and product development."
If someone at the bank criticizes the compliance officer for being too involved, Mr. Lewis said to tell him: "If I go to jail I'm taking you with me."
While the compliance officer needs to know what's going on, Mr. Lewis warned that one person can't do everything. Senior management has to make a financial commitment to hire enough people to execute the compliance program.
Getting Financial Commitment
The officer should be able to say to an executive that the bank needs, for example, to increase the compliance staff by one-half person for every $25 million the bank grows in assets.
Mr. Lewis said that kind of commitment is rare.
"Why does the bank get bigger but we don't get any more help?" he asked.
Delegating compliance responsibility to existing employees is the answer if senior management will not allow any more hires. Mr. Lewis recommended choosing one person in each department to report on compliance to an oversight committee at the bank.
"You can't do the whole shebang by yourself," he said.