The Consumer Financial Protection Bureau (CFPB) expects organizations to oversee business relationships with service providers to ensure compliance with applicable laws and regulations. But companies can’t simply check a box and generate copies of vendor or supplier certifications. Organizations must do their due diligence and implement simple controls.

FTC and CFPB Expectations

The FTC and CFPB expect the following:

  • Companies must develop an effective process for managing the risks of third-party relationships.
  • Consumers must not be exposed to unwarranted risks or that vendors that do not comply with applicable laws and regulations.
  • Clear demonstration that unfair, deceptive, or abusive acts or practices have not occurred.

Agencies can better meet these expectations by applying the following measures:

  • Confirming vendors are complying with applicable laws and regulations.
  • Assessing vendor training and oversight of their employees.
  • Enforcing long-term compliance through contracts.
  • Ensuring timely response to risk exposures and other consumer protection issues.

Best Practices

To ensure your agency meets and successfully manages vendor compliance, consider the following best practices:

  1. Create a data flow diagram – By showing your vendors how you expect data to flow from them through to your organization, you establish a process that helps to eliminate potential problem areas.
  2. Provide advanced notice when conducting an audit – Audits are an ongoing part of your vendor compliance management program. Providing your vendors with an awareness that you intend to audit compliance measures enables them to secure processes – and it promotes goodwill.
  3. Schedule on-sight visits – One of the best ways to ensure vendor compliance is to maintain a face-to-face relationship with the organization. Solid relationships build trust.
  4. Ask questions and understand how everything works – You want to understand vendor processes and how they flow into your company’s methods. Learning their business model is an effective way to streamline workflow and ensure compliance.

How well are you currently managing vendor compliance? Click here to join RevSpring on October 20 at 2 p.m EDT for our next webinar, Managing Vendor Compliance, to find out more about best practices for building and maintain these relationships.

For more from RevSpring, visit their blog Accelerate Revenue - RevSpring

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