AS THE DAYS AND MONTHS PASS, compliance officers often reflect on the bank’s compliance program, its accomplishments, and what is yet to come. In the case of customer account servicing, the message is clear. Quality and fairness in servicing continues to be in the spotlight. Customers expect high-quality service
and regulators continue to focus on ensuring products and services are provided in a fair and
equitable manner. The industry is faced with an evolving landscape budding with new products
and services that offer unique and creative features and benefits. Compliance officers must ensure
they continue to help the bank successfully navigate the landscape by identifying and mitigating
compliance risk in all aspects of account servicing, including fair lending and UDAAP. Weaving
regulatory requirements throughout the servicing process will enhance service quality and make
sure the bank exceeds customer expectations, differentiates itself in the marketplace and avoids
regulatory land mines. Every bank desires customer loyalty and it is up to those who service
customer accounts—from the front line to the back office—to make certain customers stay.
Fair Servicing Risk
Fair servicing risk can arise as a result of non-compliance
with consumer regulations or bank policies and procedures.
For a bank to identify and mitigate this risk, its managers, operations teams, and compliance personnel must understand
the servicing processes, associated compliance requirements,
and compliance risks. Because servicing activities vary by
customer and are highly dependent on both the people
and the systems involved in the day-to-day maintenance
of accounts, robust procedures and guidelines are essential
for a bank to minimize its compliance risk and ensure high
levels of customer service.
Understanding fair servicing risk starts with identifying
the main servicing processes and their sub-processes. For
example, when reviewing payment processing, a keen understanding of the related sub-processes for loan payment
applications (including payment adjustments, interest rate
adjustments, and assessment of late payment fees) is important to identifying all potential risks. Procedures addressing
both main and sub-processes should include practical steps
and requirements to address the comprehensive risks identified and ensure that controls are focused on accuracy and
compliance. That in turn will help make sure customers
are treated consistently, accurately and fairly.
BY LIZA WARNER, CPA, CFS, CRMA AND KAREN CULLEN, CRCM