In a speech delivered at a recent Consumer Bankers Association conference, Acting US Comptroller of the Currency Michael Hsu called for banks to adopt principles of fairness in their business practices to bolster compliance efforts.
"I believe that banks can improve the effectiveness of their compliance risk management programs by developing a strong internal sense of fairness," Hsu argued. Complying fully with regulations and legislation can be difficult, he acknowledged. This is especially true during times of immense change and uncertainty, as we have experienced in recent years.
"In environments of change, executing well-designed and resourced compliance programs is just half the challenge," Hsu said. "The other half is adapting and anticipating where compliance risks are likely to emerge. To do that, having a strong sense of fairness can be important."
Traditionally, banks treat compliance as a zero-sum game that necessitates trade-offs in innovation and growth. Hsu contended that this is shortsighted. "Strong and effective compliance risk management should lead to greater freedom and more certainty to innovate and grow," he said.
A focus on fairness can be powerful in this regard, as well. "By elevating fairness, banks can improve their ability to anticipate and adapt to emerging compliance risk issues," Hsu concluded. "The stronger a bank's ability to do that, the less it will need to look over its shoulder at its regulators and the more degrees of freedom it will have to innovate and create banking products 'for the people.'"
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