Record Number of Regulatory Changes and Greater Enforcement Actions Significantly Spike Costs for Community Financial Institutions

Institutions Are Feeling the Pain of the 76 Percent Increase in the Costs Necessary to Keep Up With Regulatory Changes

NEW HAVEN, Conn., Jan. 20, 2016 (GLOBE NEWSWIRE) -- Community financial institutions (CFIs) faced a record-breaking 125 regulatory issuances during the fourth quarter of 2015, increasing the total number of regulatory pronouncements to 329 for the full year 2015, according to the Banking Compliance Index™ (BCI). This represents a 56 percent increase from the number of rule issuances institutions saw during Q3 2015, and a nine percent increase over the full-year 2014.

These changes come along with a staggering 4,309 pages of new regulations that must be read, interpreted and implemented by each institution in addition to the rules that already apply to CFIs. The BCI also showed the total number of hours a typical institution would need to devote to the Q4 2015 changes soared to 968, increasing the total number of hours to comply to over 2,200 hours for all of 2015.

Consequently, the index’s FTE Consumption Score during the last quarter of 2015 weighed in at a hefty 2.23. This is the highest level calculated since Q3 2013’s 2.34, and represents the number of full-time employees that the typical institution needs in order to keep up with that quarter’s new regulations.

“The volume of new regulatory changes that financial institutions must now quickly get-up-to speed on, in addition to all of the existing regulations they must already comply with, has become a huge burden on financial institutions,” said Pam Perdue, EVP of Regulatory Operations at Continuity, the regulation technology company behind the BCI. “This burden can be overwhelming and is weighing heavily on community financial institutions who may not be equipped to support some of these rules.”

In addition to dramatic increases in new regulation, there were 159 enforcement actions taken against CFIs in Q4 2015, pushing the tally of regulatory enforcement actions to 712 for all of 2015, a 15 percent increase from the 620 enforcement actions regulators took in 2014.

The record-breaking volume of regulatory changes, combined with the greater number of hours required to comply, and the level of enforcement actions, has appreciably driven up the incremental cost per banking institution to a record $52,317 in Q4 2015. This represents a more than 76 percent increase over the incremental costs seen one year ago in Q4 2014. The total industry cost during Q4 2015 alone was $328 million, according to BCI data.

“The outlook forward is for more of the same. The regulatory agencies don’t look like they plan to slow down anytime soon,” said Donna Cameron, Director of Regulatory I/O at Continuity. “Some items being worked on now for 2016, such as those related to lending as well as same day ACH payments, have significant impact and will continue to compound the work.”

About the Banking Compliance Index (BCI)

The BCI is an index which tracks the quarterly regulatory and enforcement climate, and measures the incremental cost burdens on financial institutions to keep up with regulatory changes. It is compiled and analyzed by experts at the Regulatory Operations Center™ (ROC). Regulatory changes include newly imposed or expanded regulations, as well increased/decreased compliance thresholds and changed definitions for existing rules.

The BCI is calculated each quarter using a multivariate analysis that can be weighted across different contexts and is calibrated to determine the regulatory impact on financial institutions of varying sizes, product mixes, and regulatory oversight. Analysis includes key indicators such as volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and the supervision and enforcement climate. The BCI data sources include: the CFPB, FDIC, FED, NCUA and the OCC. The BCI is calculated using an average institution size of $350 million. 

To access a complimentary recording of the Continuity RegAdvisor Quarterly Briefing webinar held on Thursday, January 14, 2016 which details the most recent changes to the BCI and its impact, please click here.

About Continuity

Continuity is a leading provider of Regulation Technology (RegTech) solutions that automate compliance management for financial institutions of all sizes. By combining regulatory expertise and cloud technology, Continuity provides a proven way to reduce regulatory burden and mitigate compliance risk. Our Compliance Core™ is an ecosystem of solutions designed to automate all aspects of compliance management, from interpretation of regulatory issuances through to intuitive task delegation, vendor management and board reporting. Continuity serves hundreds of institutions across 40 states. For more information about Continuity, visit


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