Regulation B’s 1071 requirements are like a snowball right now. If your institution will be a 1071 reporter, the related challenges seem to be getting bigger and bigger because the compliance dates are getting closer. Even if 2025 or 2026 seem like a long way down the road, “compliance time” moves fast.
We understand there may still be some resistance from management at this point and we’re guessing this likely boils down to a combination of factors: 1) the length of time before your mandatory compliance date; 2) the cost; and 3) the seemingly never-ending legal battles. Let’s address these concerns.
Management might question the need to incur costs now if waiting is an option. While that’s a legitimate concern, you still need to consider what will all be required of you, your systems, etc., to meet your mandatory compliance date. You also have to consider what other compliance requirements, like open banking (i.e., the Section 1033 Rulemaking), might pop up and require time on your calendar. Your schedule is not going to open up and provide 1071 implementation time until you actively put it on your to-do list. Waiting simply makes every component an emergency, when it doesn’t necessarily have to be. Isn’t it easier to sail into compliance with a trade wind, than to have to blow in at the last-minute like a hurricane? Working with employees and vendors at a reasonable pace puts you in a better position to address issues as they arise, hopefully avoiding the need to put out fires later. Lastly, will 1071 go away? That seems highly unlikely, as it would literally take an act of Congress to reverse the law. Could the specific requirements change at this point? Well, things can always change. The fact of the matter is any changes become easier to deal with once systems and processes are in place.
You might want to pass along the following clip from our recent 1071 Thought Leadership Group meeting to your management and/or Board. It walks you through the litigation that was, and what is likely still to come. After recapping the litigation issues, Jerod discussed the Beta Filing Platform that allows a glimpse into how 1071 reporting will look. But keep in mind, before you can report the data, you need to figure out how you’re going to collect the data. The practice period, therefore, is pretty important so that you can figure out what data you’re getting and/or not getting.
Getting top-down support makes your overall Compliance Management System (CMS) more effective. Being proactive and not reactive also paints your CMS in a much more positive light in the eyes of your examiners. If you’re looking for help, you can still join our 1071 Thought Leadership Group and reap the benefits of not only learning the regulatory requirements but also hearing from other institutions facing the same challenges.
Having the opportunity to discuss the requirements in detail will ease your implementation challenges. You also get access to quarterly one-on-one 1071 meetings to help you deal with any 1071 issues. That’s worth the price of admission! Our September meeting had a lot packed into the 90-minute meeting as institutions prepare to practice and we hope you can join us in the future!
Published
2024/10/16