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What is a Compliance Management System?

July 1, 2015

Nary a week goes by that I do not talk to somebody about the concept of a Compliance Management System, or "CMS" for short. Now made famous by the CFPB's examination protocol, the CMS has become the sine qua non for federal and state examination readiness.

I have written extensively about the Compliance Management System. Perhaps these two articles would be of interest to you:


Policy, Procedures, and Examinations - Part I: Mortgage Brokers


Policy, Procedures, and Examinations - Part II: Mortgage Bankers 


Some companies want to retain us to put in place a CMS, not realizing that, in most cases, they already have one! There are law firms and compliance firms that have no problem in charging terrifically and immoderately for something that is largely hiding in plain sight. Tabulated binders, sophisticated templates, and all manner of bells and whistles are sold to credulous companies seeking the Holy Grail to the CMS requirements. 


Of course, we work with clients on their CMS needs. But first I let them know that if they are maintaining certain basic compliance structures, they likely already have a CMS! Maybe it needs to be reviewed by a firm such as ours, but that review can be done by just going through the structure itself easily and at a modest fee. 


I am going to give you a brief checklist of sorts. Consider it a way to get prepared for a banking examination, whether state or federal. The checklist tells you what an examiner is going to look at in determining if you have a CMS.


So what is hiding in plain sight? The structural components that I provide in the checklist. If you satisfy these components, you will be ready - and many of you already do satisfy these components - without having to go out and retain a firm to build for you what you have already built for yourselves!


Seek guidance, where possible. 


Seek compliance support, where needed.


Fortify the weaknesses and ensure the strengths.


But first and foremost, take stock of the existing compliance structure. You may be surprised to learn that the CMS purveyors' fancy binders and due diligence tasks are already manifest in your Compliance Management System and the compliance elements are working just fine!


Click below, read the article, and apply this basic checklist approach to evaluating your Compliance Management System.


Best regards,


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Jonathan Foxx - Portrait
President & Managing Director

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