Episode Description:
Today’s COMPLY Podcast is part one of a conversation had between Rhonda McGill, Senior Director of Client Solutions here at PerformLine and John Henson, now General Counsel and previously Head of Legal and Compliance at consumeraffairs.com. Their conversation is on various topics around marketing compliance across industries that we see under the microscope of growing regulatory scrutiny. These topics include:
- The small size of the average compliance team and how they can still remain compliant
- Insights as to why training, development and employee cost are receiving higher portions of the compliance budget this year, compared to legal and consulting services
- The risk and reward trade offs when it comes to monitoring gaps in your marketing compliance processes
Show Notes:
- 2022 State of Marketing Compliance Report: https://bit.ly/3LQJdLC
- “The Trends Shaping Marketing Compliance” Webinar: https://bit.ly/38d1lR4
- Follow John: https://www.linkedin.com/in/john-h-henson/
- Follow Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
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About COMPLY: The Marketing Compliance Podcast
The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Ashley:
Hello! And welcome to this episode of the COMPLY podcast. Today’s podcast is part one of a conversation between Rhonda McGill, Senior Director of Client Solutions, here at PerformLine. And John Henson, now general counsel and previously head of legal and Compliance at ConsumerAffairs. Their discussion is on various topics around marketing compliance that we see across industries that are under the microscope of growing regulatory scrutiny. These include the small size of the average compliance team and how they can still remain compliant, insights as to why training development and employee costs are receiving higher portions of the compliance budget this year compared to legal and consulting services, and the risk and reward trade-offs when it comes to monitoring gaps in your marketing compliance processes. Thanks again for tuning in, and enjoy the show.
Rhonda:
Thank you so much for joining us today. I’m Ronda McGill and I’m the Senior Director of Client Solutions here at PerformLine. So to give you a little bit of background about how we got here, here at PerformLine, we set out to better understand how compliance professionals are filling across various industries, including banking, mortgage, FinTech, partner banks, higher education credit cards, just to name a few. These are areas that seem to be at the crosshairs of growing regulatory scrutiny. And because of this, we wanted to capture the fillings on the various topics. Some of which we’re gonna dive into today after analyzing the responses; we discovered many interesting trends that we thought were worth sharing. So we decided to reach out to one of our dearest friends of PerformLine, John Henson. Thanks, John. And again, thank you for making yourself available for this discussion.
John:
Oh, glad to do it, Rhonda, and good to see you. And I look forward to this conversation.
Rhonda:
Yes. I have definitely been looking forward to it and it seems like quite a few other folks are looking forward to it as well. And hopefully, someday, we’ll eventually get an opportunity to do one of these in person.
John:
I hope so. I hope so. Oh,
Rhonda:
That to each other.
John:
<laugh> yeah, absolutely.
Rhonda:
So, so for those that have not had an opportunity to meet you or have had an opportunity to see you believe it was one of our COMPLY webinars that you and I did together. Can you please share a little bit about yourself?
John:
Sure. I am John Henson. I’m currently in charge of Legal and Compliance at ConsumerAffairs. And prior to joining ConsumerAffairs in January of 2021, I was at LendingTree for six years. I had various roles at LendingTree, such as Head of Compliance. I was actually in the mortgage business vertical for a while there in the interim general council. So I’ve been in the online marketing compliance game for a while. And then, prior to LendingTree, I was at a region’s bank here in Birmingham, Alabama, where I currently live.
Rhonda:
Nice. Nice, nice. So, needless to say this guy’s got all the compliance background, so we’re gonna soak it all outta your head today, hopefully, and now you’ll be able to leave us with some good nuggets and some best practices so that folks can better prepare themselves for what’s coming.
John:
I hope so.
Rhonda:
So let’s just dive on in and we’re gonna talk a little bit about some of the key points that we discovered as a pro in the process of doing the trends report. So one of the things that the report revealed was something that most of us already are pretty much aware of, especially those of us with a compliance background and that’s that most of the compliance teams are pretty small. In fact, 62% had five or less persons on their teams. And so these small teams have a lot of challenges to keep up with the regulatory change, contract management, all the different oversight, you know, just trying to stay on top of everything. Can you share some thoughts on how small teams can overcome some of these challenges and still remain compliant?
John:
Yeah, know, and I think that’s right. And in my experience, both at LendingTree and ConsumerAffairs, the compliance teams have been very small even when I left LendingTree, it was probably under that five people or less. So that’s very accurate. And what happens there is you have to have prioritization, right? And you have to understand what’s actually important to the business. And we would all love to have a large compliance team with testers and, you know, robust testing plans and, you know, 30 odd people, but that’s just not the case. And, you know, there’s a couple of ways that you can come overcome it if you are a small compliance group. And one way is to really invest in the business and work on that first line of defense. And I know that we all talk about the first line of defense and the second line of defense, and the third.
John:
And, and it feels like on a small compliance team that you’re playing all three lines. But sometimes, you know, you can go find people, and you’ll see a lot of self-selection in that, in the business. Those are the people that are coming to you and saying, Hey, did you know we were doing X, Y, and Z, Hey, have you seen this? That’s a great person to pour into and really build that compliance champion in that group to be an extra set of eyes and ears to really hone those people’s compliance skills. And a, a lot of times I’ve seen in the past people move from the business into a compliance role just because they were, they really showed some interest and desire in that area.
Rhonda:
Absolutely.
John:
I would also say that training is really important. Not just those compliance champions that we just talked about, but when, if you’re doing regular trainings and you have compelling conversations about those topics and not just top checking a box, how do you tie into what’s happening in the real world? How do you tie into what’s happening in your business? And if you’re, if you’re, and if your, if your business partners can see that connection, again, it goes to create those people coming to you, those that with questions and with the did you knows, because you can’t be everywhere, especially if you are a small compliance team. So you’ve gotta figure out how to have extra sets of bio ears on the ground, in those businesses to really help. And then obviously the last thing is technology. How do you leverage technology to create efficiencies, whether that’s technology around change management, whether that’s you know, technology around oversight and, and marketing reviews like PerformLine or even you know, getting some technology in the workflow. I think that that’s very, very important as well.
Rhonda:
Absolutely. And I know as a lot of the things around technology are becoming a buzz, digital, all the dig, digital issues, and everybody’s trying to understand the algorithms and all of these different things. I know that that’s become a, even more of a challenge. And as I’ve talked to a lot of our clients, it’s like, you just can’t be on the surface. You’ve gotta start peeling back the layers and understand how all those inputs are going in and how the decisions are being made and how is that machine learning, taking place. And so I’m sure you’re probably having similar conversations over ConsumerAffairs with your team around making sure that they’re digging in and understanding how AI works and just staying on top of all of those things. So it’s, it’s, it’s a very hard challenge for small groups, but unfortunately they have to get it done and hopefully utilizing some types of workflows and programs like we have here PerformLine. That can be something that can really provide them some additional assistance in oversight.
John:
Yeah. And I, and I would say to piggyback off that real quick, Rhonda mm-hmm <affirmative> that if you’re not digging into those inputs into your algorithms or inputs into those marketing the, the decision making processes in marketing, like that’s a real red flag, and you have to understand why they’re choosing the levers to pull that they’re choosing and make sure that, that you’re not violating any rules. Fair lending obviously is one that is top of mind, but you really have to understand that. And unfortunately we all, fortunately, unfortunately, and unfortunately we all work with very smart people and they can very high level talk about things that don’t make sense sometimes. And it’s not your job as a compliance person to understand everything. It is literally their job to explain it to you. So you, so if you’re having problems with your tech team or your analytics team, like you really need to dig in there and have them explain it to you, like you’re five years old, cause they should be able to do that. And if they can’t, then that’s a red flag as well.
Rhonda:
Absolutely. I totally agree with that. And I always felt bandwidth is not an excuse. You have to do these things
Rhonda:
You have to do it. You really have to do it. So one of the other areas that we were looking at is like budgets, a lot of the companies and a lot of the folks that responded to our trends survey was around the fact that budgets are increasing in 2022. And there’s gonna be a significant increase in spending for training and development and employee costs. Previously more spending was going towards like legal and consulting services, but only 10% sick that they plan on putting their increased budgets towards these consulting services. Do you have any insights on why organizations are spending more on those other costs and versus the consulting and the legal services? Cuz it seems like with more regulatory scrutiny, that’s where you’re funding your, you know, the budget should be like leaning towards some of the legal expenses that are gonna becoming.
John:
Yeah. I think that compliance is starting to get the treatment of other business areas. And what I mean by that is those build versus buy decisions are being made around compliance as well. You know, just like it is product or marketing or sales, right. We can outsource anything, but is the money better spent investing in people here that live and breathe and dye your business and really understand it because it’s great to have consultants swoop in, sit in a conference room for six weeks, make PowerPoint decks and leave. Right. But the problem is a, someone has to implement those PowerPoint decks and they don’t have the understanding of the business and you know, they don’t understand why your data architecture is built in such a way that it makes it hard to get this piece of the information. So you have, you gotta go to the other database to get it and cross-reference them.
John:
They don’t have time to dig into that and help and help the business remain compliant using all that mm-hmm <affirmative> so creating those internal knowledge bases, basis are really create more efficiency for the business, from both an economic and a business perspective. In my opinion, it’s cheaper to do it internally. Sometimes if you get the right people, and equip them correctly and it’s also, you get better response and better, I don’t, better’s probably not the right word, more tailored, advice and information when you have someone internally in the business.
Rhonda:
Yeah, absolutely. Absolutely. So another hot area for a lot of our clients and probably everywhere you go is around marketing. So a lot of organizations are saying that they’re utilizing an omnichannel marketing strategy, but they’re not monitoring all of these interactions from a compliance standpoint. In fact, 59% of organizations lack compliance, monitoring on at least one channel that they’re currently using. Why do so many organizations have monitoring gaps? What are your thoughts on that?
John:
You know, I think monitoring gaps while not ideal, right? Mm-hmm <affirmative> are, especially for smaller companies with a, you know, small compliance team. You have to have the right risk reward tradeoffs there. Sure. And what channels are your risk? Are you willing to be more tolerant of risk in mm-hmm <affirmative> and, and, and why, and why, why are you more tolerant in those areas? Is it because you’re not spending as much there is it because you’re not doing, you know, in lending you’re not doing great base advertisement, so you don’t have a lot of comp, you may not have a lot of technical compliance risk, as I say, but you know, I’m doing a lot in social and oh, by the way, we’ve got all this personal information about consumers that we’re really targeting them. And so maybe that is a, a riskier area than others.
John:
So you, you can have those monitoring gaps, but, and, and you’ve gotta make the right trade-offs and risk tolerance there. The good news is right, is that the CFPB has helpfully said that your compliance management system should mirror the size and scope and complexity of your organization. Right? Mm-hmm <affirmative> so if you’re a you know, $50 million a year revenue business, you’re not gonna be expected to have Bank of America’s compliance department. Right. Right. And so I think that regulators understand that as well. And if you’re, again, if you’re creating processes and systems internally to help you be efficient, and you can show that, you know what, we may have had a compliance breakdown over here, but that was an outlier. Right. And we corrected that outlier and you can see here’s the remediation we did there. Right. So that, I think that there’s a lot of patience is not the right word. Maybe grace is the right word. It was good. Say grace from regulator, right. Gotta learn from the mistakes. Yes. I give yourself a break.
Ashley:
Thanks for listening to this episode of the COMPLY podcast! We hope you enjoyed the first part of the conversation between Rhonda and John around these marketing compliance challenges. Join us next time as we dig into part two of this conversation. For additional insights into all things marketing compliance you can head to performline.com/resources, and be sure to check out the links and resources in the show notes. Thanks again for listening and we’ll see you next time!
Rhonda McGill 
Gianna Kennedy