financial condition, management, and new business
plans and compliance program implications;
• status of previous examination issues, which could
include verification that corrective action has been
sustained or action plans for issues still outstanding;
• modifications or planned changes to the compliance
program/risk management framework; and
• other pertinent developments or plans that could
impact compliance.
• interim meetings throughout the onsite examination to
check on information needs as well as exam status including
preliminary findings or observations. Typically, management
establishes a schedule for these meetings with the examiner–
in-charge at the beginning of the examination. Doing so helps
promote a meaningful dialogue and exchange of information
that benefits the examiner and bank management
Meeting Supervisory Expectation.
Meeting the increasing supervisory expectation that the compliance function identify and provide its financial institution’s
leadership with critical information to ensure they are aware
of, and can effectively monitor the organization’s risk. We use
the term risk broadly because these days risk for the compliance
professional may not be regulation-specific (e.g., operational
and reputational exposures). In fact, regulators have heightened
expectations around risk identification, information gathering,
and reporting, particularly as it pertains to complaint management and issues management.
As the current “it” items these areas are two of the supervisory priorities of today’s compliance examinations. In terms of
examination management, Principle #2 (Effective Program and
Exam Preparation) and Principle #3 (Effective Communication
with Stakeholders) are particularly critical to promoting an effective examination process. There are some other “it” items to
consider in executing under these principles.
Complaint Management: Complaints have always been a focus
for the regulators. Historically, the regulator’s primary source of
complaint information was from the consumers themselves via
the consumer complaint process. The regulators were the last stop
for consumers who had exhausted all opportunities for resolution
with the institution. Beyond that, customers who were unable
to resolve an issue with their financial institution had limited
recourse in getting the issue resolved. Customers could use word
of mouth by telling friends about issues they have. While that
might make the customer feel better, it rarely led to resolution.
Regulators have expanded their expectation regarding complaints
to include complaints a financial institution receives directly and
indirectly from its customers.
Regulators are interested in how your organization manages
its complaint process. Do you have a centralized function for all
customer complaints? Do you include customer complaints received through call centers, branches, and your electronic delivery
channel(s)? It is important to show that the complaint process
has been formalized and includes a tracking mechanism. This can
be as simple as a spreadsheet for institutions with low complaint
volumes to something as complex as custom-built databases that
allow institutions to maintain a history of the dialogue with the
consumer and record the ultimate resolution.
It is not enough to simply “track the numbers.” Regulators are
looking at the entire process and have an expectation that management understands just what their customers are complaining
about. The examiners are looking at what your institution is doing
to determine the root cause of the customer issue. Regulators are
also asking if other customers are impacted? If so, is it by the same
product or by similar products? Is your organization looking across
lines of business? Can you answer these questions honestly? Regardless of how your complaint program is structured, it is important to
understand the impacts below the numbers. Being able to articulate
and document your root-cause analysis and customer impact(s)
are more critical than ever. Demonstrating that your organization
takes complaints seriously and works to address the root cause and
not just the symptom is important to telling your institution’s story.
It is also important to note that, over time, the methods used
by customers to register dissatisfaction have changed as consumers embrace electronic media. E-mail, social media sites, and even
video sharing services have allowed today’s customer to communicate with literally thousands of friends in minutes by utilizing
electronic media. Your institution should consider what, if any,
capacity it has available to monitor electronic media to watch for
complaints. If you have a web presence, are you monitoring your
customer’s communications to ensure that customer complaints
that are sent via your website or social media space are being addressed and tracked? A number of institutions that have failed to
address consumer complaints have been the victim of “viral” web
content through the forwarding of messages and the posting of
videos. These types of incidents not only bring your institution
under the scrutiny of the regulators, but also under the scrutiny
of the public. Having a robust complaint process that addresses
customer concerns and allows an institution to detect trends and
address root causes can help prevent customers from taking to
the public arena to address the frustration of “not being heard.”
Your complaint management program should include a
reporting mechanism to ensure appropriate management and
board oversight. Finally, the complaint program should also
include an escalation process to ensure that multiple complaints
are consolidated and routed quickly to management’s attention.
Your institution should document what constitutes escalation and
consider empowering the complaints function to escalate issues
that may not be defined but, due to very unique circumstances,
may warrant management awareness.
Issues Management: Examiners have also given issues management greater emphasis during the examination cycle. Issues
management is a broad term that encompasses any deficiencies
that an organization has identified. The regulators are looking at the
institution’s process for identifying, rating, remediating, and tracking
