and quizzing sales staff on product knowledge. (Employees cannot
explain to customers what they don’t know, after all.)
Because proactive sales monitoring can be so difficult, it is important
to have strong back-end controls to supplement the process with
data-driven information. The best tool available may be complaint
analysis and trending. Banks must have controls in place to isolate
complaints related to improper sales or unauthorized account opening and to perform an analysis of trends. For example, banks should
look for an indication that customers feel they received a product
from which they could not benefit, were not told of a fee or other
limitation, or that customers did not authorize. If a bank spots these
kinds of issues, the next step is to drill down into the data to determine
if there are particular geographic regions or branches that are high
risk for sales issues, and take decisive action as quickly as possible.
Banks should also establish an internal ethics hotline, if they
don’t already have one. It is important to review these ethics hotline
complaints in addition to customer complaints. There should be an
impartial internal investigation team that can review sales integrity
allegations or data trends to determine validity and root cause.
Subsequently, potential consumer harm should be considered by
compliance and remediated as appropriate.
Bonus Points: Some customers may express themselves by requesting a fee waiver rather than through an actual complaint. For that
reason, banks should track the number of fees it is waiving by
product type. A sudden spike in fee waivers or a recurring theme as
the reason for requests could indicate a problem on the front end.
In addition to complaint trending, banks should use the data at
hand to further supplement the monitoring program. Here are
some to consider:
■ ■ ■ New account activity–banks should track how many accounts
are closed after 30 or 60 days, and the channel through and
location at which those accounts were opened. It is also prudent
to track how many accounts are not used by the customer
within the first 30–60 days as an indication that the customer
may not be aware of the account. Pay attention to fee assessment during this time. It could be an unfair practice to charge
customers for services they are not receiving.
■ ■ ■ Account closures–the bank should review account closures,
particularly of new accounts, to ensure there are no spikes
indicating that customers may have felt misled in some way.
■ ■ ■ Incentive payouts–the bank should review incentive payouts; if an
employee is way above his or her peers or experiences a sudden
upward spike in incentive pay, it might be time to do some digging.
Please see the column on page 18, Using Data Science to
Mitigate Bank Employee Fraud for additional reporting ideas.
It is important to train sales staff before they start talking to customers, and annually thereafter. As a baseline, they should be
trained on all of the products and services they will be selling. As
noted above, an employee who does not understand a product
cannot explain it to the customer.
In addition to product knowledge, sales staff
should be coached on sales integrity. At the outset,
training should establish the expectation that staff
report any potential ethics violations to the ethics
hotline. Sales staff should also receive job-specific
UDAAP training on the following how to’s:
■ ■ ■ Providing consumers with all available options
that may meet their needs. For example, sales
staff helping customers with a mortgage should
explain both fixed and adjustable rate loans so
that the customer can decide which option may
be most appropriate. Bankers should never assume they know what is right for the customer
and present him or her with limited options to
make it “easier” for the customer.
■ ■ ■ Explaining product terms and limitations. It is
usually easy enough to convince staff to provide
the key terms. However, it may be another story
to persuade them to explain product limitations.
It doesn’t sell!
■ ■ ■ Not offering a product to customers if they know
they will not receive a benefit from it. For example,
if the bank offers credit protection products that
benefit only customers that are currently employed, sales staff
should not recommend that product to a customer that has
mentioned he or she is unemployed or retired. Ideally, sales staff
should be scripted to clearly explain all limitations such that all
customers can understand when they would not derive a benefit.
■ ■ ■ Cautionary Tale 6: While a bank may want to explain what it
believes is “ethical” in terms of when an employee can claim a sale
or a referral, that in and of itself does not constitute sales integrity
training. For example, while the bank may set rules that prohibit
claiming a sale if the customer walked in requesting a particular
product, these scenarios should not be the main focus of sales
training. The bulk of the materials should clarify expectations for
customer interactions such as how to obtain consent. Scenario-
based training with real examples is most effective though.
While the area of sales practices compliance continues to evolve,
it is important to jump on it with all of the speed and perseverance
of an extreme athlete. We’re all free falling together but if we’re
supporting each other, it’s a little less scary. ■
ABOUT THE AUTHORS
MEG SCZYRBA, J.D., CRCM, has been involved in the compliance
industry for over 20 years and currently chairs the Boards of the
ABA Compliance School and ABA Bank Compliance magazine. She
is the Fair and Responsible Banking Risk Program Manager at a
large bank and was honored as ABA’s 2011 Distinguished Service
KARA TUCKER, ESQ., manages a team in the Consumer Fair and
Responsible Banking division at Sun Trust Banks. She also serves
on the ABA Compliance School Board and Faculty. Kara can be
reached at TuckerKara@gmail.com.
Any opinions expressed in this article are the authors’ own and do not
reflect the views of their employers or the ABA.