A recent study by the CFPB showed that compliance costs for banks’ operations, IT and human resources exceeded the costs of compliance departments themselves, which accounted for 13 percent of costs.
In the CFPB’s study of seven financial institutions, the operations function accounted for the largest share of compliance costs—between 15 percent and 29 percent of total compliance costs.
IT costs comprise between 10 percent and 43 percent of all compliance costs, though because banks fulfill their IT needs using a variety of in-house and third-party options, estimating compliance-related costs is more difficult.
Human resource costs accounted for between nine percent and 24 percent of total identified compliance costs, resulting primarily from the design and development of compliance-related training and monitoring of training programs.
Additionally, the CFPB study examined aggregate costs across seven study participants, finding that the two smallest study participants saw higher compliance costs than the five other larger banks, though the CFPB said the findings are “tentative.”
“The ultimate benefits and costs of a regulation are difficult to measure, and progress in their measurement is likely to come in small increments rather than major breakthroughs,” the CFPB report said. “Research on the effects of regulations is an ongoing priority for the Bureau… Meanwhile, we will continue to address problems that we see in the marketplace and evaluate responses to those problems on the basis of the evidence that is reasonably available—mindful that, whatever the costs of regulation, the costs of not regulating adequately can be even larger.”