cation. As such, 85% of customers were not
provided a tax return. This was both deceptive and unfair.
• The bank used a third party to track student enrollment but did not confirm de-enrollment information it received. If the bank later learned
that it had erroneous information, it did not
waive late fees or interest that had wrongly accrued. This was deemed an unfair practice.
• When students had loans both active and in
deferment, the account statement showed a
minimum payment that reflected the minimum amount due on the loans in repayment
plus the interest due on the deferred loans.
The latter interest was not actually due at that
time, which was considered deceptive.
This is one of the consent orders that moved
student loans to the top of the UDAAP product
list last year. Banks would be well-advised to
remember that this is a potentially vulnerable
customer population that should be provided
with as much information as possible to allow
for informed decision making.
■ ■ ■ Also in November 2017, the Federal Reserve cited a bank for its mortgage origination practices. While the bank did not have a
procedure for allowing customers to pay down
a mortgage interest rate through discount
points, loan officers often gave prospective
borrowers the option. Borrowers regularly
paid thousands of dollars for discount points
but did not always receive the corresponding
lower interest rate.
Operationally, banks need to be prepared
to provide all services as offered. This often
requires having appropriate policies and procedures in place in order to provide a consistent
experience for customers.
That’s what’s new with UDAAP. And what’s
new with you? ■
ABOUT THE AUTHOR
MEG SCZYRBA, CRCM, has been
involved in the compliance industry
for over 20 years and currently chairs
the ABA Compliance School Board
and the ABA Bank Compliance
magazine Board. She has taught UDAAP for the
ABA Compliance Schools since its inception in
2005, and she is also a frequent speaker at industry
compliance conferences and schools. Meg has
published a number of articles on topics ranging
from Reg AA/UDAAP to Reg O and authored the
recurring Training Room column in ABA Bank
Compliance. Meg was honored as ABA’s 2011
Distinguished Service Award recipient. Meg is a
graduate of the University of Missouri–Columbia,
with a B.A. in in Psychology and a Juris Doctor. She
can be reached at firstname.lastname@example.org.
Any opinions expressed in this article are the author’s own
and do not reflect the view of her employer or the ABA.
Second Line Advisors serves as the industry
specialist for the “second line of defense”
functions, providing executive search,
advisory, and interim consulting solutions
across the financial services sector.
Learn more at
identifying proven Leaders
in the Second Line of Defense
email@example.com / secondlineadvisors.com / @SecondLineAdv / linkedin.com/company/second-line-advisors