Regulation: Roadblock or Opportunity

Regulation:Roadblock or Opportunity?Elizabeth GoodingPresident, Insight Forums & Gooding Communications Group

2Copyright Insight Forums LLC 2014

Not a Regulatory Primer – I Promise!

Understanding Regulation versus ComplianceGlobal Trends that Influence RegulationImpact of Regulation – Why You Should CareParticipating in the Regulatory ProcessTurning Roadblocks into Opportunities

Thank You


Regulation versus Compliance

Back in the day when everything was printed…

Question Everything!


Regulations and Internal Compliance

Create a Governance BoardDocument Policies and ProceduresGet Audited/Reviewed by outside parties

"If a company markets privacy and security as key selling points in pitching its service to consumers, it is critical that it keep those promises. Any company that makes misrepresentations … about its privacy and security practices risks FTC action."

FTC Chairwoman Edith Ramirez

Oh, SNAPchat!

Don’t Over-PromiseDon’t Over-Promise


Compliance Has a Cost

When pursuing new markets, understand potential increases needed in controls, audits, certifications etc.Requirements are constantly changing and outside expertise is often required to keep up-to-date.• PCI DSS – will continue to have updates• USPS, Canada Post et al continuous state of pain• OSHA - hazard communication (Haz Com)


Regulatory Risk Rolls Down Hill

CorporateCompliance

Supplier Compliance

Issues/Catalysts

Regulators

Potential for

structural change


Trending Issues Driving RegulationGlobal Issues• Economic Stability (post-financial crisis)• Tax / Financial Accounting Reform • Privacy (NSA did not help this situation!)

• Security “Terrorism-Era” ReformsUS Healthcare (economy related)

Secure management and appropriate analysis of corporate, national and personal data is global theme.


Financial Services: Dodd-Frank Dodd-Frank Wall Street Reform & Consumer Protection Act

The most comprehensive financial regulatory reform measures taken since the great depression. • Oversight and supervision of financial institutions, • New resolution procedure for large financial companies, • New agency: Consumer Financial Protection Bureau (CFPB), • Reforms the regulation of credit rating agencies, • Changes to corporate governance and executive compensation• Incorporate the Volcker Rule (prevents depository institutions from engaging in

proprietary trading among other things)• Registration of advisers to certain private funds, • Significant changes in the securitization market.

Catalyst?Economic Meltdown


One Result: The CARD ActStructural Change in the Lending Market

Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act)• Prior to 2010 industry earned 73% of card revenue

from interest, 17% from fees and 10% from interchange fees. All were reduced and capped.

• Communications were overhauled (Shumer box!)• Credit industry complied – and found new sources of

revenue.

CARD Act Fact Sheet


Healthcare: Affordable Care Act Patient Protection & Affordable Care Act (ACA)

Structural Change!• New Market of Un/Under-Insured• Marketing Direct to Consumers• Healthcare Exchanges • Medical Loss Ratio – @ 70% of premium$ must be spent on care

Seek new sources: Use of PHI for treatment-relatedmarketing communications for which financial remuneration was received, provided the individual was given notice and could opt out.

+New DocumentsMore mailings

Process Improvements


HIPAA Omnibus Rule Changes 2013Rules Affecting Marketing using PHI (September 2014)• Now, marketing communications about a third party’s products or

services for which financial remuneration is received by the covered entity require authorization from the individual, (with few exceptions).

If your organization uses PHI to market its own, or a third party’s, products and services, your organization should:1. Draft a form authorization to cover multiple, ongoing marketing

communications;2. Implement or refine a process for tracking marketing communications

and related authorizations to ensure that the recipients have signed authorizations or an exception applies; and

3. Ensure that business associates and their subcontractors follow procedures that are materially the same.


Healthcare +: HIPAA HITECH

September 22, 2014 Covered entities must bring all of their Business Associate Agreements (“BAAs”) into compliance with the Rules; the new Rules also apply to Business Associate’s agreements with their own covered subcontractors.Changes include imposition of direct liability under the Rules on Business Associates for compliance with certain HIPAA Privacy and Security Rule requirements.Increased fines for non-compliance.• Not less than $1k and up to $50k per violation


Are Companies Complying?

Thomson Reuters 2013


Financial Services: Gramm-Leach-Bliley Act“Almost 45 % of respondents do not outsource statement printing to a GLBA-compliant vendor……GLBA requirements must be enforced throughout the statement composition and preparation process and validated through a series of quality tests and periodic audits.Recommended practice is for outsourced print vendors to be reviewed annually by federal and state bank examiners according to FFIEC guidelines.”

CSI: 2013 Banking Priorities Study

Are you outsourcing to a GLBA-compliant vendor?


Get Uphill from the New Regulations

Pay attention BEFORE they become law• Be aware of your client’s position (industry lobby)• Understand what may “roll down hill”• Participate in your industry associations• Write Congress• Participate in “Calls for Comment”

Raise Your Voice!

USPSCFPBDOLEPA

CongressStates


Camp and Baucus Proposals: “Ad Tax”50% of advertising expenses would be immediately deductible. Remaining 50% would be capitalized and amortized over 10 years. First $1,000,000 of advertising expenses are exempt.IHS Global Insight estimates “ad tax” could reduce advertising-induced sales in the U.S. by more than $446 billion and place 1.7 million U.S. jobs at risk. (I’m skeptical)

ImpactDirect MailStatement messagingCatalogs

Corporate Reorganization

More fragmented marketing

departments


Turning RoadblocksRegulatory changes provide an opportunity to reevaluate, redesign, renegotiate and demonstrate value to clients.

“Bitter or Better?Break us or Make us?

Victim or Victor?”

… Into Opportunities


Regulations Start ConversationsDo You Need a Lawyer to Interpret USPS Changes?


What Keeps Clients AwakeShow clients you understand their industry and needs.

Personal Liability!

2014 Cost of Compliance Survey


Understanding Regulations Differentiates

Communicate with clients about changes needed to comply –from them and from you.Consider audits and certifications that will set you apart (understand cost).Working with leaders can make you a sought expert with the laggards (charge accordingly.)Market your expertise (but don’t overpromise.)

Regulation Causes Changes.Changes Must Be Tested.

Testing is Expensive!Get More Done At Once.


Elizabeth’s Regulatory Top 51. Don’t Wait for Regulations to Affect You!2. Look at the Big Picture – Structural Business Change.3. Learn to work with Compliance – and “work” Compliance4. Make the regulatory approach part of your design “palette”5. Understand and plan for the cost of compliance (PSPs)

Sites to watch:• Consumer Financial Protection Bureau (CFPB)• Commodity Futures Trading Commission (CFTC)• Federal Reserve System ("Fed")• Federal Deposit Insurance Corporation (FDIC)• Financial Industry Regulatory Authority (FINRA)

• National Credit Union Administration (NCUA)• Securities & Exchange Commission (SEC)• State Insurance Commissioners (by state)• State Banking Regulators (by state)• www.ComplianceWeek.com Compliance Week


Thank You

Questions or feedback on this presentation, please contact:Elizabeth [email protected] x7Find me on LinkedIn or follow onTwitter @EGooding

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Regulation: Roadblock or Opportunity

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