Contents
MARCH/APRIL 2017 | VOL. 38 | NO. 2
NOT LONG AGO,
Skills that have historically been viewed
as “soft skills,” such as collaboration and
communication, are of vital importance
to your program.
Cultivating
Soft Skills
Your Compliance
Program’s Cherry
Topping
for a college-level law school class I teach at Suffolk University called “Compliance Practice
Skills.” The delectable party treats were targeted for a more restrained use, namely, a class
exercise on drafting policies and procedures. More on this shortly...
When you think about compliance skills, what comes to mind? Are they
rules-based skills? Well, yes, as regulatory knowledge is certainly critical
for compliance officers to do their jobs. But a compliance officer must also
understand the building blocks of their discipline—especially the seven
factors that, according to the Department of Justice’s (DOJ)U.S. Sentencing
Guidelines,1 must exist for a compliance and ethics program to be considered effective—and which are foundational to any compliance program.
But subject matter expertise and knowledge of the tenets of compliance
are not the only necessarycomponents. Skills that have historically been
viewed as “soft skills,” such as collaboration and communication, are of
vital importance to your program.
And increasingly, soft skills are being viewed as essential in building
a sound compliance culture—and in incorporating a compliance culture
throughout the entire organization.
Eat Dessert First
What many in the business world have traditionally—and somewhat
dismissively—labeled as soft skills are today taking on critical importance for those working in compliance roles. For example,
Today, those charged with compliance responsibilities
try best to keep pace with the frenetic volume of regulatory changes, constantly helping build plans to adjust to
those changes, re-training staff on the new requirements,
updating testing programs, reporting on progress to
leadership, identifying and managing risk, preparing for
regulator inquiries and inspections…and that’s just Monday.
If you were to think of compliance as a formal meal,
the main course would include many task-based elements
Compliance officers often have strong tendencies to get caught up in
keeping pace with the day-to-dayrequirements and doctrinal laws, that
what might be considered to be soft skills are often relegated somewhere
towards the back of the “things to do” pile.
BY BARBARA BOEHLER, J.D., LL.M.
8 | ABA BANK COMPLIANCE
;WHENWASTHELASTTIMEYOUPERSONALLYFILEDACOMPLAINT?Didyoutake yourbusinesselsewhere?Ordidyoureturntotheestablishmentandgiveitanotherchance?
Best
Practices
BYLIZAWARNER,CPA,CFSA,ANDCRMA
Technology has made filing a complaint easy. The Consumer
Financial Protection Bureau (Bureau) invites consumers to share
customer. Second, complaints provide valuable feedback to help
understand when a bank’s products, services, or employee actions
for the
Consumer
Complaint
Management
Program
How to Ensure
NT OF THE ROOM.
on is projected behind me,
k their surreptitious glances
nd familiar words tumbling
many times in front of many
iting loan applications from
or predominantly white areas,
ginations in other areas that
ority residents. The laws that
in place in the 1970s, when
ch more common than it is
ou don’t discriminate! Obvi-
ns as possible.”
wn words as I say them. Is it
s really a relic of the past? Do
n class with me has allowed
eir interactions with clients?
ning and/or fair lending case
use even the most exhausted
Recent events show that what
n expand to other, dare I say,
ns. Newspaper headlines that
nd civil money penalties in
y.
m early 2016 indicated 66% of
that black people are treated
pplying for a mortgage loan1.
mbers of the National Bureau
fact, this perception is reflec-
ge Disclosure Act (HMDA)
tan areas during the period
ded that African-American
orrowers are 78% more likely
h a high cost mortgage when
nly on the data produced by
our own institutions as opposed to aggregated
industry data, it is possible to miss the forest
for the trees and come to the conclusion
that only banks subverting fair lending
regulations are perpetrators of this type
of discrimination.
The Consumer Financial Protection Bureau (Bureau) is certainly of the opinion
that discrimination is present in our industry. In recent years, enforcement actions for
redlining appear to be increasing in both
frequency and the dollar amount of the
penalties levied. In addition, the complexity
of analysis incorporated into enforcement
actions of this nature by regulators (while
intimidating when read from the default
perspective of a compliance officer: “What if
this was my bank?”) gives detailed and useful
insight into the methodology used by examiners.
The highest and best use of an enforcement action
against another institution is to convert the structure
of allegations made by regulators into an actionable
review plan as partof the Compliance Management System. Based on recent cases, regulatory enforcements have
included citations reflecting risk throughout the loan process:
;Market Presence and Advertising
;Customer Interaction
;Receipt of Applications
;Underwriting and Non-Origination
;Pricing and Fees
When viewed through this lens, the enforcement action becomes a road map to the potential exposure points for redlining
and fair lending issues throughout the loan process.
No compliance officer wants to believe that the institution
they serve would even inadvertently exclude areas with a significant minority population from their lending footprint or provide
higher cost mortgages to minority applicants, but taking steps to
both discover and correct potential redlining will help ensure that
there are no surprises in that area at the time of an examination.
REDLINING
CM
The potential
ramifications of
a redlining and/
or fair lending
case brought
by regulators is
enough to cause
even the most
exhausted among
us to suffer from
insomnia.
ISTO
CK
is a Relic of the Past
MARCH-APRIL 2017 | ABA BANK COMPLIANCE | 29
;
;
;
•
•
•
•
•
Cautionary
Look at
Sales
Practices
Sales staff should provide all
material terms, including fees
and limitations to customers
without pressuring them
into a product that benefits
the sales staff, or worse,
signing customers up
for products without
their knowledge.
STOCK
Extreme UDAAP
FEATURES
COLUMNS
4 | Compliance
Management
BY CARL PRY,
CRCM, CRP
6 | What’s New
with U(DAAP)?
BY MEG SZYRBA, CRCM
18 | Employee
Fraud
BY DAVID MCLAUGHLIN
35 | The Other Side
BY S TU LEHR, CRCM
DEPARTMENTS
36 | From the
Hotline
BY LESLIE CALLAWAY,
CRCM, CAMS, CAFP
MARK KRUHM, CRCM,
CAFP
RHONDA CAS TANEDA,
CRCM
38 | Regulatory
Developments
Table
42 | Around the
ABA
44 | Continuing
Education Quiz
8 | Cultivating Soft Skills: Your Compliance Program’s
Cherry Topping
BY BARBARA BOEHLER, J.D., LL.M.
What is more difficult than learning regulations
is understanding empathy, and the importance of
communicating effectively. No one will listen to your
fabulous advice, if they can’t hear it over the noise of your
less-than-artful delivery.
12 | Extreme UDAAP: A Cautionary Look at Sales Practices
BY MEG SCZYRBA, J.D., CRCM, AND KARA TUCKER, ESQ.
Every bank engages in some version of sales practices,
but improper sales practices are steeped in the traditional
marketing approach of utilizing compensation and sales
goals to incent employees. While it is difficult for a bank to
monitor its sales practices, here are some guidelines and
cautionary tales for engaging in this extreme sport.
20 | Best Practices for the Consumer Complaint Management Program
BY LIZA WARNER, CPA, CFSA, AND CRMA
Understanding and managing consumer complaints
is imperative in meeting strategic business objectives,
customer retention, and profitability. Here are best practices
to help your bank recover from misunderstandings or
mistakes, while turning an unhappy customer into a loyal
one, and meeting your regulatory obligations.
28 | How to Ensure Redlining is a Relic of the Past
BY KATHRYN MORRIS, CRCM
Recent events show that what starts as an indication
of redlining can expand to more traditional fair lending
concerns. Taking steps to both discover and correct potential
redlining will help ensure that there are no surprises at the
time of an examination.
