PERSON OF THE WEEK: Karl Dahlgren is managing director of BAI, a nonprofit independent organization that helps financial services leaders make smart business decisions.
The firm offers events and executive roundtables for peer-to-peer exchange of ideas; benchmarking and market research to understand consumer and banking trends and behaviors; and training, including compliance and professional development at all levels – from frontline service teams to the board of directors.
MortgageOrb recently interviewed Dahlgren to learn more about how mortgage lenders can prepare their employees to face today’s regulatory challenges.
Q: What would you say are the top compliance challenges facing the mortgage industry in 2018?
Dahlgren: The biggest compliance challenge is not a single regulation, but ensuring employees receive timely, relevant training. Today’s constantly evolving regulatory landscape requires role-specific, day-to-day training to ensure that staff is up-to-date and aware of all the regulations to keep their processes compliant.
For example, when a regulation is updated, a new one is implemented or an effective date in on the horizon, employees need to learn what effect that may have on their daily processes. In addition to these day-to-day changes, regulatory training courses will likely be required. It is the responsibility of an organization’s leadership team to make sure employees understand the importance behind these changes and why it matters for their customers and organization. Instead of assigning all of the courses available to every employee, training should be both relevant and impactful to an individual’s position. This can help minimize training time while providing more meaningful takeaways from the course.
Q: How can leaders enable their employees to face these challenges?
Dahlgren: Consider a holistic approach to training, focused on building a culture of responsibility. This can happen by breaking down barriers between compliance training and professional development. An isolated or siloed approach to regulatory issues and day-to-day processes and procedures is no longer effective, especially since almost every regulation impacts the everyday activities of employees across the entire organization. Training for new and current employees alike should include compliance processes and procedures, as well as ethics and relationship management.
One way to manage this type of integrated approach is to provide role-specific training. A regulation’s impact may be different for the frontline service team than it is for managers or senior leaders. Role-specific training not only enables employees to work more efficiently, but to also better serve customers. Because it moves away from a “check the box” approach, this training scenario gives employees the skills to better serve customers while efficiently and effectively doing his or her job.
It also presents an opportunity to explain the “why” behind certain compliance-based processes, and helps shift the view on training from something one has to do to an educational and professional development resource.
Q: What can leaders do to help prepare their organizations for upcoming regulatory changes?
Dahlgren: Instead of focusing on a regulation at the time it may come to fruition, such as the potential changes to TRID or HMDA, mortgage leaders should focus on strategies that can be applied to all regulatory changes. With any increase in training, leaders of the organization need to take steps to ensure that employees do not feel burned-out. Consider taking proactive steps to avoid learning fatigue, such as reviewing course scores to uncover any common areas of difficulty among employees. This enables officers to address these difficulties and better teach employees, helping to create a true culture of compliance and responsibility.
Leaders can also help alleviate a common pain-point in training by “right-sizing” the amount of assigned training. It is not uncommon for organizations to assign more compliance training than is necessary to ensure they do not get penalized by the regulators. This shifts the focus from the end goal to the means. Important outcomes including employee development, risk reduction and a positive consumer experience can easily get lost in broadly assigned, measurable course completions. Tailored, relevant, efficient training is essential for engaged employees to retain the necessary information and demonstrate the appropriate behaviors to protect their customers and the organization. An organization that takes this approach will have the culture in place to embrace regulatory changes as they arise.
At the end of the day, everyone in the organization does not have to be an expert on the various regulations that impact the mortgage industry, but every employee should have a clear understanding on how it impacts his or her job and why it matters. This knowledge is not gained from one mandatory course, but continuous, timely and relevant training and process improvement.
Compliance should not be feared, viewed as a burden or even an unnecessary time investment, but instead as a way to develop employees into responsible, ethical professionals in our industry.