Compliance Burdens Lead Banks to Cut Services

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By Yin Wilczek

July 22 — Growing regulatory requirements are taking a toll on bank products and services, according to a new survey.

Almost half—46.3 percent—of bank compliance officers recently polled by the American Bankers Association (ABA) said their institutions reduced offerings for loan accounts, deposit accounts or other services because of regulatory compliance burdens.

This was an increase compared to 2011 and 2013, and a substantial jump compared to the 21.9 percent who indicated in 2009 that their banks cut services or products because of regulatory burdens, the ABA said in a July 20 release.

In addition, almost 46 percent of the respondents said their banks decided not to launch a product or enter a new market because they were unsure of the regulatory impact.

Compliance Officers 

Four hundred and fifty-seven bank compliance officers responded to the ABA's biennial web-based survey, which was conducted from February to March.

Among other regulatory burdens, the ABA release cited the ability-to-pay rule as one regulation that has led to a decrease in bank services, observing that it caused one-third of banks to reject “otherwise creditworthy mortgage borrowers.”

The Consumer Financial Protection Bureau rule took effect in January 2014 and requires banks to consider consumers' ability to repay home loans before extending them credit.

In other findings, more than 55 percent of the respondents said their compliance budgets have grown since 2013, mostly due to staff increases and handling more regulations. Almost half of the respondents also said their banks have outsourced at least one compliance function.

Of those, 76.9 percent of the respondents indicated that their banks outsourced the compliance audit function while 46.3 percent said they outsourced fair lending reviews.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Ryan Tuck at

A summary of the survey results is available at