I took the time to look for commonalities between the Supervisory Highlights that the CFPB issues each quarter. The CFPB has not wavered from a repeated message. No matter what type of institution they are supervising, there are some basic elements that they discuss consistently!
Here are a few commonalities that I see repeated time and again:
- Policies and procedures were not updated to describe actual practices.
- Policies and procedures included outdated information.
- Did not conduct regular monitoring.
- Lacked formal programs to oversee and manage data supplied by furnishers.
- Did not have defined processes to verify the accuracy of information provided by their providers.
- There were no quality control policies and procedures to test for accuracy.
- The CFPB expects a financial institution under its supervision to maintain an adequate compliance management system (CMS) tailored to its operations. A robust and well-administered CMS is vital to preventing violations of Federal consumer financial law and the resulting harm to consumers.
- One or more institutions’ boards of directors did not hold regularly scheduled meetings or receive information sufficient to adequately oversee compliance practices.
- Institutions lacked formal follow-up or escalation procedures for personnel who were delinquent in completing their required training; and allowed to continue interacting with consumers, even when their training was overdue.
- Institutions lacked comprehensive compliance audit programs.
- Weaknesses in inquiry and complaint management and did not log or record consumer complaints.
- Depriving compliance personnel of important tools for detecting violations.
- Complaints (consumer) and inquiries were not recorded, categorized, or processed by the financial institution receiving them.
- Violated Regulation Z by failing to establish written policies and procedures as required by the rule.
- Written policies on loan originator compensation, qualification and identification requirements, without written procedures instructing employees on how to comply with the written policies.
- Systemic violations that were caused by weaknesses in training, monitoring and corrective action.
So if you find your practices lacking in any of these “heads up” warnings, it might be a good time to start locking down some of the issues; which are sure to be problematic when the CFPB greets you with their presence.
