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By Anna Mazzone, managing director and general manager of UK and Ireland at MetricStream


For years, banks and financial institutions have been subject to stringent regulatory scrutiny authorities at every level. Today, the pressure on them is even greater as regulators strive to secure the financial system against corporate scandals, data breaches, corruption and fraud.

Whether it is the FCA in the UK or the OCC in the US, regulators have been persistent in issuing requests, initiating meetings and conducting examinations to evaluate banks’ safety, soundness, capital adequacy and compliance with regulations.

The challenge is further compounded for financial firms that operate in multiple locations as engagement managers often deal with hundreds of annual regulatory exams and constant meetings with different regulators. Each of them must keep track of requests from various regulators, while ensuring that the relevant tasks are initiated, document submission deadlines are met, meetings and exams run as scheduled, and the right information reaches the right regulators at the right time.

As financial firms strive to meet these demands, their responsibilities continue to grow. Every organisation must decide on their regulatory engagement strategy and establish a structured process to see it through.

Achieving all these objectives isn’t easy, but there are a few practices that financial firms can adopt to improve the efficiency and effectiveness of their regulatory relationships.


Develop a solid strategy of coordination

Building a successful relationship with regulators takes planning and commitment. The key is to first develop a solid strategy for how a financial institution will manage various types of regulatory engagements and relationships.

Doing so will not only position the firm for optimal success in its regulatory interactions but will also prepare it to deal with potential regulatory issues or risks that may have an adverse impact on its operations.

Banks that do not have a well-thought-out strategy and good relationship with their regulators are likely to be put in a tight spot when a regulatory issue may arise. Senior management and compliance teams could end up scrambling to gain control of the situation and to convince regulators that adequate controls, processes and procedures are in place.

An effective regulatory engagement strategy focuses on ensuring that all engagements are managed in a logical, transparent and well-coordinated manner through standardised practices, processes and tools.


Administer a company-wide calendar

At the start of each year or quarter, a company-wide calendar of all scheduled regulatory examinations should be published, along with regular updates every time a schedule is changed.

Generally, banks that have a good rapport with their regulators are more tuned in to upcoming examinations, requirements and schedule updates than those that don’t take the time to build these relationships.

Before an assessment, financial firms would do well to coordinate with internal stakeholders to ensure appropriate allocation and ownership of examination management responsibilities.

Pre-examination training can also be conducted to get members of the regulatory team and affected businesses up to speed. Ideally, the training should include an overview of policy requirements, examination procedures and best practices.

Team members interfacing with examiners should be coached on the conduct expected of them, as well as other relevant information about the regulators and their areas of focus.


Standardise regulatory meetings

One way to optimise the time and effort spent on regulatory meetings is to standardise the process as much as possible. This should be right from the meeting preparation stage, to the actual interaction and subsequent follow-ups.

Another way is to assign an engagement coordinator to lead the meeting planning process and other activities as he or she can work in close consultation with other stakeholders to ensure that the financial organisation is adequately prepared for the regulatory interaction.

During the actual meeting, participants will be expected to accurately and comprehensively answer questions on their areas of accountability. The engagement coordinator can then summarise the key feedback from the meeting and communicate with regulators on follow-up tasks.


Centralise document management

Since there are so many types of documents that banks need to share with regulators, it helps to have all the information stored in one central location so they can be sorted and worked on collaboratively by multiple stakeholders.

Having all this data together in one place makes it simple for stakeholders to keep track of the examination, flag important documents and stay alert to any major findings or issues before the conclusion of each examination, so they can then proactively clarify the bank’s position.

With a centralised document repository, financial firms can easily attach supporting files at each stage of the regulatory interaction or task management process. They can also enable a quick search of documents based on title and type.

The centralised system will essentially act as a database of meetings by capturing all required details, including meeting dates and participant information. Each meeting can be mapped to existing regulatory engagements, regulatory authorities, areas of compliance and associated risks.

This integrated data model gives engagement coordinators and other stakeholders a birds-eye view of each regulatory interaction and makes it easy for them to document and track meeting findings until closure.


Utilise all practices for a successful relationship

Successful regulatory relationships are all about being examination-ready as well as investigation-ready at any time. That, in turn, requires thorough planning and preparation.

Having clearly defined processes and tools goes a long way in managing regulatory requests and ensuring that the required information is quickly gathered and submitted.

The more efficient the regulatory engagement process, the higher a financial firm’s chances are of increasing trust and credibility with regulators.



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