Despite Rollback Talk, These Regulatory Trends May Increase Management Liability Exposure for Financial Institutions
White Paper Summary
Financial institutions — responsible for the personal information of thousands of customers — have long been heavily regulated by both state and federal agencies. As a result, the sector has developed a reputation for strong compliance programs.
“Their compliance regimes and spending on the IT necessary to protect customer information is very robust,” said Marc Berner, U.S. Financial Institutions Product Lead, Allied World.
Some have surmised that banks, insurers and asset managers might relax those regimes, however, amid promises from the current presidential administration to loosen its regulatory grip.
“There was an expectation that the regulatory environment would become more tepid. So far we’ve observed a mixed-bag depending on the type of regulator and class of business,” Berner said. “For example, it is widely viewed that the May 2018 rollback of certain Dodd-Frank provisions fell far short of unwinding the heightened regulatory framework for financial institutions that was put in place following the global credit crisis.”
In addition, ever-evolving cyber attacks and the rise of cryptocurrency represent blind spots in regulatory oversight, and as these trends evolve, they will challenge financial institutions to ensure their cybersecurity and cryptocurrency activities don’t fall afoul of regulators who are likewise trying to keep up.
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