Compliance as a Competitive Advantage

Recently, we presented on Compliance as a Competitive Advantage at Compliance University by Online Lenders Alliance. We shared a perspective we've developed over 20 years of working with financial services companies: that compliance, when done right, is not a drag on innovation or growth. Instead, it can be a differentiator—a strategic asset that builds value, trust, and resilience. For the PPT presentation, click here. (What follows is lightly edited from the original session for clarity and readability.)

Key Takeaways

• Right now, we're watching the legal and regulatory landscape shift in real time. The CFPB—the agency that, since its creation, has defined so much of the playbook for how companies manage compliance risk—is scaling back. But importantly, no changes have been made to federal consumer financial law—yet. It's all still in place.
• Companies face a fragmented, unpredictable enforcement landscape. When regulatory signals are weak or contradictory, enforcement becomes more opportunistic. Regulators and plaintiffs look for the most visible, most vulnerable targets.
• It's less expensive to build guardrails and a glide path now than to pay for crisis response or regulatory snapback later.
• As the federal regulatory landscape for consumer financial services continues to evolve, one thing is clear: regulatory uncertainty isn't the same as deregulation. In fact, today's environment may pose even greater legal and reputational risks than in years past—especially for fintechs and consumer lenders navigating fragmented oversight.
• After more than a decade of chasing the perfect compliance management system to satisfy the CFPB, a lot of companies finally built something that works. Now is not the time to toss it out—it's time to fine-tune it. The goal doesn't need to be to abandon structure or any compliance functions, but to make smart risk adjustments that reflect the current landscape and the realities of being in a regulated marketplace.

The Shifting Regulatory Terrain

Recent developments at the Consumer Financial Protection Bureau (CFPB) have prompted many companies to rethink their compliance posture. The Bureau has pulled back from its aggressive supervisory posture, rescinded over 60 guidance documents, and seen significant budget and personnel shifts. At the same time, other enforcement players—particularly state regulators, the Federal Trade Commission (FTC), and class action plaintiffs—have ramped up their activity.

In short, the rules haven't changed, but the referees are behaving differently. Federal laws like the Consumer Financial Protection Act, Federal Trade Commission Act, Truth in Lending Act, Equal Credit Opportunity Act (ECOA), Fair Debt Collection Practices Act (FDCPA), and Fair Credit Reporting Act (FCRA) remain in full force. But how those laws may be interpreted and enforced is becoming increasingly unpredictable.

Less Regulation, More Risk

It's a common misconception that lighter federal oversight equals lower risk. In reality, weaker regulatory signals can embolden enforcers to act more opportunistically. Agencies and plaintiffs alike are often looking for a high-profile target—someone to make an example of. So, there's a risk of becoming the test case—the company that's used to send a message. It doesn't matter if you're doing what everyone else is doing. If you're the one they choose to pursue, that can become a very expensive, very public learning moment.

And those risks aren't just theoretical. We've seen companies lose bank partners, face funding delays, or get hit with enforcement actions simply because they were in the wrong place at the wrong time.

That's why now—not later—is the time to invest in thoughtful, forward-looking compliance. It's not about building a bunker. It's about increasing your valuation, attracting better partners, and being ready for scrutiny when it comes.

Building a Strategic Compliance Culture

Without consistent federal guidance, many companies feel adrift. But successful compliance programs are adapting—drawing lessons from prior enforcement actions, supervisory highlights, and consent orders—even if they were premised at the time on aggressive interpretations of the law. They can still be an indicator of the type of situations that can get companies in trouble or, at the least, draw attention by regulators, state attorneys general, and class action attorneys.

For fintechs, including lenders, and their service providers that means focusing on nuts-and-bolts compliance with consumer financial law, including:

• Advertising and marketing, including disclosures of material terms and conditions
• Military Lending Act (MLA) compliance
• Loan servicing practices, including timely payment crediting and fair loss mitigation
• Electronic Fund Transaction Act (EFTA) and Regulation E
  • Fair lending and ECOA, especially consistent underwriting and proper adverse action notices
• Credit reporting under FCRA, with an emphasis on accurate furnishing and dispute response
• Payments and debt collection

For advertisers and lead generators, the same pattern holds. Risks often arise not from the products themselves but from how they are marketed and how consumer data is collected and used. Past enforcement and litigation themes have included:

• Deceptive marketing and consumer confusion about a company's role
• TCPA compliance and proper consent for texts and calls
• Data-sharing practices and privacy disclosures

In the absence of new federal rulemaking or bulletins, companies are mining past enforcement actions, engaging with peer groups, and commissioning third-party compliance assessments to guide decision making and signal maturity.

Compliance Builds Trust—and Value

Regulators, investors, and consumers are all looking for the same thing: trust. And trust is built through documentation, responsiveness, and transparency.

During due diligence, well-organized compliance programs reduce red flags and instill confidence. If your company is thinking about an M&A transaction, a major fundraising round, or a bank partnership, a well-run compliance function becomes part of the pitch. It shows that you're mature, resilient, and built for scale.

A robust compliance function can serve as a kind of perimeter defense—signaling readiness to state regulators and consumer advocates alike.

Partnerships, Third-Party Risk, and the New Signaling Game

Nowhere is the link between compliance and business opportunity clearer than in bank-fintech partnerships. Bank partners are raising the bar, asking sharper questions about complaint tracking, legal compliance, and third-party audits. So are investors.

In this environment, compliance is not just about keeping regulators at bay. It's about winning trust, closing deals, and standing out in a crowded market.

Some companies are getting proactive—they're highlighting their compliance practices in RFPs and pitch decks. They're making compliance part of their brand, and it's working.

Concrete Ways to Make Compliance a Strategic Asset

Here are some concrete steps companies can take:

• Be Due Diligence Ready—Always. Keep your policies, training logs, and complaint records up to date and accessible.
• Map Enforcement Trends. If states are targeting specific sectors, reallocate resources accordingly.
• Make Training Matter. Move beyond check-the-box training to promote culture and reward compliance wins.
• Leverage Independent Assessments. Audits add credibility and expose gaps before a regulator or partner does.
• Integrate Legal Early. Involve compliance and legal teams at the outset of product development and deals. It shortens cycles and prevents problems before they arise.
• Self-Regulation. In an environment where formal oversight is inconsistent, self-regulation can be a strategic benefit that helps your company avoid being an outlier.
• Compliance Management. If it's not broken. . . If your team has spent over a decade building a compliance framework that has sparked ongoing internal conversations—across Legal, Product, Marketing, and Operations—why stop talking now? Sustaining that dialogue is how companies stay aligned, responsive, and ready for whatever comes next.

Compliance Enables Growth

Compliance isn't just about avoiding trouble—it's about earning the right to grow. It tells regulators, partners, and consumers that your company is built to last.

Legal and Compliance teams aren't the ones saying "no"—they're the ones helping you say "yes" with confidence.

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