Compliance is arguably the hottest topic in receivables management at the moment. Both credit grantors and third party firms alike are taking a closer look at their compliance procedures and systems. And with good reason. Though an already tight regulatory environment, the increased oversight from the CFPB makes compliance even more critical.

A strong, effective compliance program makes it more likely your employees will do the right thing. Which of course mitigates your risks, decreases potential lawsuits and makes fines less likely. Furthermore, the ability to demonstrate an effective compliance program makes an exceptional defense if misconduct does occur.

Recently Stephen L. Cohen, associate director in the Security and Exchange Commission enforcement division, said, “I’m very surprised that we don’t see more sales and marketing pitches, by which I mean: what does your internal compliance program look like? I don’t see a lot of companies trying to sell us on the notion that they should be trusted to do an internal investigation because they have such a good internal compliance program and a culture of compliance and ethics.”

While receivables management activity is not regulated by the SEC, the concept remains the same. Federal guidelines clearly indicate lower fines and other consequences for malfeasance at companies with documented compliance programs and corporate cultures of ethics.

Knowing you need to create an effective compliance program is one thing. Knowing HOW is entirely another.

Based on federal sentencing guidelines in consideration with other agency best practices, we consider an effective compliance and ethics program to include most, if not all, of the following recommended elements:

  • High level oversight
  • Risk assessment
  • Standard of conduct – policies and procedures
  • Training and education
  • Open lines of communication (hotline)
  • Monitoring and auditing
  • Response to detected deficiencies
  • Consistent corrective action

 

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