How to Handle a Regulatory Exam Inquiry

2. What are some of the main challenges you can face before, during and after a regulatory exam?

Regulatory exam management is often a time-consuming and resource-intensive process that can pose significant challenges for financial firms.

Some of the main challenges we see in our practice are: 

Managing compliance with the continually changing regulatory landscape

Financial firms often lack sufficient resources to monitor and comply with complex and ever- changing regulations. This ultimately leads to poor regulatory compliance and poor regulatory inquiry management at a later stage. 

Managing documentation

This process is cumbersome and error-prone, especially when using manual data management systems. Also, the deadlines for providing the requested documentation are generally very tight. 
We see that firms typically underestimate the resources required for effective documentation management and timely submissions. In some instances, such inefficiencies result in negative regulator feedback or, even worse, actual deficiencies in the final report.

Juggling multiple exams simultaneously

Firms may be subjected to multiple exams simultaneously, making it challenging to ensure that each exam receives adequate attention. A common mistake in such a situation is to treat the exams jointly, assuming the same documentation can be submitted to different regulators.

Post-exam corrective measures

Another common mistake is to expect the actual exam to be the most difficult part of the regulatory exam management process and to underestimate the resources that must be allocated in the post-exam period. In such cases, firms are unprepared to timely and efficiently remediate identified issues.