MINNEAPOLIS — Now that the Consumer Financial Protection
Bureau is beginning to levy penalties in association with vehicle lending,
results from the newest Regulatory & Risk Management Indicator conducted by
Wolters Kluwer Financial Services might carry even more validity.

When asking top American bank and credit union executives
about what "keeps them up at night," Wolters Kluwer found the majority of
respondents — 46 percent to be exact — said regulatory reform in general.

Wolters Kluwer indicated study participant offered responses
related to the Dodd-Frank Act, the CFPB and sheer amount of new rules and
requirements that are taking effect.

More than a third of respondents pointed toward evolving
consumer lending regulations as their main concern, including the CFPB's new
mortgage lending rules as well as significant changes to the Truth in Lending
and Real Estate Settlement Procedure acts.

Wolters Kluwer — a comprehensive provider of compliance,
risk management, finance and audit solutions and services — found it surprising
that nearly one in 10 participants said no compliance concern keeps them up at
night.

"Although, many of these respondents were in non-compliance
or risk management focused roles," study orchestrators said.

As the results from that one question mentioned, Wolters
Kluwer contends U.S. banks and credit unions are feeling even greater
regulatory and risk management pressures than they were at the start of the
year

The Indicator, which started with a baseline score of 100 in
January when Wolters Kluwer Financial Services surveyed nearly 400 U.S. banks
and credit unions, rose to a score of 136 when more than 430 respondents
provided their feedback at the end of April.

To calculate the Indicator, Wolters Kluwer Financial
Services used 10 main factors, seven of which revolve around direct input from
banks and credit unions on their top compliance and risk management concerns
and three of which are based on regulatory data the company compiles.

Among these ten factors, four significantly drove the
increase in the overall Indicator score. They included:

—Number of new federal banking regulations.

—Rising dollar amount of regulatory fines.

—Growing amount of resources needed by banks and credit
unions to meet regulatory requirements.

—Challenges facing financial institutions' senior leadership
in managing and controlling risk.

Concern over the ability to comply with regulatory
requirements and prove compliance to regulators were two significant factors
for the largest institutions participating in the Indicator – firms with more
than $7.5 billion in assets.

Study orchestrators also discovered these banks and credit
unions were also much more likely to have hired additional compliance and risk
management professionals in 2013 than smaller institutions, with more than 60
percent saying they had done so.

In addition, Wolters Kluwer Financial Services Regulatory
& Risk Management Indicator offered a greater level of information and
insight on institutions' foremost compliance and risk management challenges.

For instance, from a compliance standpoint, the Indicator
showed that majority of banks and credit unions are most concerned with the CFPB's
newly combined RESPA/TILA disclosure (59 percent), as well as its recently issued
mortgage servicing rules (53 perent) and qualified residential mortgage and
qualified mortgage requirements (51 percent).

However, the largest institutions are far more concerned
with Unfair Deceptive and Abusive Acts and Practices standards (55 percent) and
managing other regulatory risks in general versus specific requirements.

"The Indicator, which is a combination of our industry data
analysis and insight as well as bank and credit union input, provides a
barometer around the current state of the overall regulatory and risk
management environment within the financial services industry," said Timothy
Burniston, vice president and senior director of Wolters Kluwer Financial Services'
risk and compliance consulting practice.

"It's apparent from this first reading that banks and credit
unions are more increasingly concerned with managing the growing amount of regulatory
change on the horizon," Burniston continued.

"They're also looking to their executive teams and boards to
play a more significant role in helping to mitigate and control the many
regulatory and operational risks they face on a daily basis," he went on to
say.

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