Starting compliance: step one

If It’s Not On Paper, It Doesn’t Exist

There is a Chinese proverb saying, “A journey of a thousand miles begins with a single step.” Well, it’s especially true when creating a compliance program.

To start your compliance program, put your commitment in writing.

This will be more important than ever as the new administration has nominated an “enforcer” to head the Consumer Financial Protection Bureau (CFPB).

Alan Wingfield, attorney at Troutman Pepper says, “companies that are subject to close regulatory oversight can get a lot of value in implementing a Compliance Management System. With a little bit of paperwork, you can document what you are already doing anyway that a regulator will like.”

The most important notion of what Alan says is this:  If it’s not on paper, it doesn’t exist.

That’s the truth of the automobile business. “He said,” or “she told me,” doesn’t cut it.  Everything has to be in writing.

Here’s how to start, commit to the following:

Consumer Protection Compliance Charter

Purpose:

The Chief Compliance Officer assists the Board of Directors in the oversight of _________’s Compliance Program.  Its duties and responsibilities are to:

  • Design a Compliance Program to help prevent and/or detect violations of the law or the standards of business conduct;
  • Oversee and monitor adherence to the policies and procedures and Compliance Program;
  • Ensure that communication of the Compliance Program is disseminated to all staff;
  • Review reports and actions taken resulting from compliance investigations or audits;
  • Oversee and monitor the resources assigned to the Compliance Program to assess their adequacy;
  • Review materials that are presented to the Board regarding compliance;
  • Review the compliance education and training program;
  • Perform such other duties and responsibilities as may be requested by the Board.

Reporting Structure:

  • The Chief Compliance Officer reports quarterly to the (Owner or) Board of Directors.

Members:

The Chief Compliance Officer is ____________.  The Members of the Board to whom he reports are ______.

Insert signature lines here.

Here’s more content you can use when starting your compliance program:

Resolution Relating to the Consumer Protection Regulatory Management Program

WHEREAS, the Board of Directors exercises general oversight authority with respect to the Company’s programs, policies and procedures for legal and regulatory compliance; and

WHEREAS, in light of increasing scrutiny by regulators of business practices in the motor vehicle sales and finance industries, it is desirable at this time to reaffirm the Board’s oversight with respect to the Company’s regulatory management programs relating to U.S. federal and state consumer financial protection laws;

NOW, THEREFORE, BE IT RESOLVED, the Board hereby delegates authority to the Chief Compliance Officer pursuant to its Charter to provide reasonable assurance that the Company maintains appropriate ethical and legal consumer compliance programs and review of its effectiveness;

FURTHER RESOLVED, that the Board hereby approves the Statement of Consumer Protection Policy attached hereto as Appendix A and the Company’s consumer protection regulatory management program (the “Program”) described therein and presented at this meeting to the Board, including the summary of risk oversight to govern the material risks, issues and resolution regarding the Program; and

FURTHER RESOLVED, that the Chief Compliance Officer’s general oversight with respect to the Company’s regulatory compliance programs, policies and procedures, significant legal or regulatory compliance exposure, and material reports or inquiries from government or regulatory agencies shall include without limitation, the Program; and

FURTHER RESOLVED, that the appropriate officers of the Company are authorized to do all things necessary or appropriate to carry out the purpose and intent of the foregoing Resolutions.

Insert signature lines here.

Statement of Policy with Respect to Compliance with Consumer Protection Laws (Appendix A)

The Board of Directors (the “Board”) of Company A, Inc. (“Company A”) recognizes that the motor vehicle sales and finance industries has been subject to extensive regulation. 

These circumstances enhance the importance of strong compliance processes.  Accordingly, Company A has created designated a Chief Compliance Officer to implement its consumer protection regulatory management program (the “Program”). The Chief Compliance Officer will be responsible for regulatory compliance with applicable legislative and agency consumer protection requirements in the United States as applied to consumers. This responsibility will include internal review, monitoring, and appropriate remediation of current regulatory compliance policies, procedures, and practices, the development of a formal program to track and document compliance, employee training, and oversight of the consumer complaint and review process. The Chief Compliance Officer will also have responsibility for the timely review, implementation, and tracking of new consumer protection regulatory requirements and appropriate remediation of issues that are identified.  In doing so, the Chief Compliance Officer will directly interact with appropriate functions across the enterprise including, governmental relations, legal, security, litigation, and business unit associates with compliance responsibilities.

The Program and these regulatory management activities will be reported to the Board on a regular basis. The Board and the senior management of Company A are responsible ultimately for the regulatory management program.

That’s it 

Start now. Commit to this in writing, appoint a Chief Compliance Officer, and move forward.  If you would like these documents in Word format, please email tomk@bettervantagepoint.com and they will be provided to you.

Remember, if it’s not in writing, it didn’t happen.

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