The novel coronavirus has disrupted everyday life in countless ways, from social distancing to school and business closures. Yet one change that has been overlooked as we navigate this pandemic has been a torrent of new regulatory mandates.
As the pandemic potentially drags the economy into a recession, multiple federal agencies — including the Federal Reserve, the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau — have pledged to help businesses survive the downturn. These agencies and a trade association for state banking regulators, the Conference of State Bank Supervisors, have issued a joint statement pledging to offer regulatory assistance to banks whose customers are being negatively affected by this pandemic.
The regulators are also urging banks to do their part during this global crisis. Regulators recommend that financial institutions work constructively with borrowers and other customers in affected communities.
The Department of Housing and Urban Development also recently announced a moratorium on foreclosures and evictions for more than 30 million Americans whose home mortgages are backed by the Federal Housing Administration, Fannie Mae or Freddie Mac. With another 40 million renters and 5 million homeowners not covered by this moratorium, more mandated protections could be on the way, as both the federal and state governments seek to counter skyrocketing unemployment rates.
Insurance industry faces confusing state-to-state variations
It’s not just the financial industry that faces a rapidly changing regulatory landscape. Companies around the world learned the hard way that their existing business continuity and disaster recovery plans didn’t adequately account for a worldwide pandemic that not only disrupted supply chains, but also forced workers — and consumers — to stay home for weeks or months at a time.
A recent survey by Compliance Week found that 45% of companies did not have a plan in place to address a pandemic, while 55% of compliance officers reported that they are now spending between 25% and 100% of their time on crisis-related activities.
For instance, in the insurance industry, COVID-19 is triggering an avalanche of new state-level regulations. Massachusetts and New Jersey are considering bills that would require insurers to cover coronavirus-related business losses, while Nevada has passed a new law that caps what insurers can charge patients for COVID-19-related doctor visits and examinations. Nevada’s emergency legislation also prevents insurance companies from charging for the COVID-19 test or any vaccines that may emerge.
In states where lawmakers have yet to address the pandemic, lawyers have filled the void and are filing numerous lawsuits, arguing that businesses ranging from entertainment to restaurants to tribal casinos should have their coronavirus losses covered.
Those efforts could be in vain, since many policies include virus-specific exclusions, but here again, new state laws, such as those proposed in Massachusetts and New Jersey, could force insurers to rewrite those policies.
Accelerating regulatory change outpaces legacy change management tools
A slow initial response to the coronavirus by the federal government has prompted states to take action. In fact, President Trump has been telling states to act on their own and not wait for a federal response, a stance that could spark even more regulatory change.
The disruptions caused by the coronavirus, while chaotic, simply build on recent trends. Ever since the financial crisis of 2008, highly regulated businesses in key verticals — including financial, insurance and healthcare — have needed to track a complex and constantly changing regulatory environment.
For instance, according to a Boston Consulting Group (BCG) report, the number of regulatory changes relevant to the financial industry more than tripled from 2011 to 2017, reaching an average of 200 per day. When you factor in the various state, federal and international regulations banks must track, the problem only gets worse. And when you add on accelerating changes intended to combat the economic damage caused by the coronavirus, relying on manual processes becomes untenable quickly.
Taken together, the chaos caused by this pandemic highlights why businesses should turn to modern tools, such as cloud-based regulatory change management (RCM) software, simply to keep up with their constantly evolving obligations.
Why the COVID-19 crisis will drive compliance modernization
Many businesses won’t have a choice but to modernize. During a crisis — any crisis, pandemic or otherwise — businesses simply don’t have the time to waste on manual, labor-intensive, error-prone tasks that can be handled more reliably and efficiently by software.
To ensure that your RCM solution will streamline your compliance efforts during chaotic times, seek solutions that help experts make decisions rather than trying to replace experts altogether. For instance, look for RCM tools that consolidate regulatory changes and publish them freely and openly, so information can be shared within your organization, regardless of whether the recipients work in the compliance department.
Similarly, prioritize solutions that are able to automatically tag topics important to your organization, such as COVID-19-related regulatory updates, and then deliver personalized summaries to key executives. The solution should also report on trend analyses and key document interaction to help management efficiently make informed decisions and develop action plans.
To help streamline remediation, seek RCM tools that reduce noise and help you focus on changes consequential to your business. Tools must be able to map required actions to controls, as well as have the ability to produce comprehensive reports that identify useful trends, such as enforcement action violations, penalty amounts, and overall agency activity by frequency and/or topic.
As the regulatory landscape continues to shift, compliance experts must change along with it. Modern RCM software that delivers automated insights, trend analysis and remediation recommendations will help your compliance experts transition away from reactive fire-drill planning so they can remain productive and proactive when the next crisis hits.