Resources

Consumer Compliance Supervisory Highlights for March 2021

99% of all FDIC-supervised institutions rated satisfactory or better

AML AND COMPLIANCE NEWS  | 

Authored by RSM US LLP


Per the Consumer Compliance Supervisory Highlights publication issued by the Federal Deposit Insurance Corp., 99% of all FDIC-supervised institutions were rated satisfactory or better for consumer compliance.

Per the Consumer Compliance Supervisory Highlights publication issued by the Federal Deposit Insurance Corporation (FDIC) for March 2021, there are approximately 3,200 state-chartered banks and thrifts supervised by the FDIC, and of those, about 1,000 were examined for consumer compliance. Per the publication, the FDIC stated overall, supervised institutions were demonstrating effective management of consumer compliance responsibilities. As of Dec. 31, 2020, 99% of all FDIC-supervised institutions were rated satisfactory or better for consumer compliance (meaning a rating of either 1 or 2) and Community Reinvestment Act (CRA) compliance.

The FDIC also outlined the five most frequently cited Level 2 or Level 3 violations noted in 2020 examinations. Seventy-four percent of total violations involved the Truth-in-Lending Act (TILA), Truth in Savings Act (TISA), Flood Disaster Protection Act (FDPA), Electronic Funds Transfer Act (EFTA), and the Real Estate Settlement Procedures Act (RESPA). It was noted that the FDIC uses a risk-focused approach to examinations, and therefore, the most frequently cited violations relate to those regulations that represent the greatest risk of consumer harm. Due to the potential for harm, the FDIC stated these areas generally represent the center of focus for consumer compliance examiners.

In 2020, there were eight formal enforcement actions issued and 16 informal enforcement actions to address areas of consumer compliance examination findings. There were civil money penalties (CMPs) of $63,466 related to violations of the FDPA, and voluntary payments of about $7.4 million to more than 67,000 consumers.

The most prevalent violations noted by the FDIC were:

  • RESPA violations involving payment of illegal kickbacks, disguised as legitimate payments for lead generation, marketing services, and office space or desk rentals.
  • TILA-RESPA Integrated Disclosure (TRID) violations noted concerns with Veteran Affairs (VA) loans where institutions did not comply with the “best information reasonably available” and due diligence standards under TRID by issuing loan estimates based on unavailable terms or rates. In addition, there were instances in which certain terms presented were not generally available.
  • One fair lending violation was referred to the Department of Justice (DOJ) for an institution issuing unsecured loans through a third party. The underwriting criteria were found to include prohibited bases of age and receipt of public income. In other cases, the FDIC found fair lending issues arose from the use of third-party credit-scoring models. Another case was sent to the DOJ, due to the institution's policy that provided different pricing for married joint applicants than for unmarried joint applicants, stemming from the way the credit scores were accounted for, for married versus unmarried joint applicants.

The full publication issued by the FDIC can be found here.

Let's Talk!

Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by RSM US LLP and originally appeared on 2021-07-15.
2021 RSM US LLP. All rights reserved.
https://rsmus.com/what-we-do/services/risk-advisory/aml-regulatory-compliance/consumer-compliance-supervisory-highlights-march-2021.html

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how Condley and Company can assist you, please call (325) 677-6251.

Share This