1. The Federal Communications Commission (FCC) has told PayPal that its revised user agreement, which calls for consumers to agree to receiving robo-calls, is misleading for consumers and could trigger FCC enforcement and fines. The FCC’s Enforcement Bureau sent a letter dated 6/11/15 to PayPal, Inc., alerting the company to Telephone Consumer Protection Act concerns the Bureau has with the company’s amendments to their User Agreement. Does your firm employ any type of auto-dialed, pre-recorded call, or text message to solicit your products? If so, let our former, Federal regulators review your tele-marketing policies and procedures for compliance with applicable Federal law.
2. According to senior regulatory officials speaking at the ABA Regulatory Compliance Conference held in Washington, DC during the week of June 15th, change management and vendor risk management are key overarching compliance concerns. “We live in a world of rapid change,” said Eric Belsky, director of consumer and community affairs at the Federal Reserve. He noted that compliance requirements have shot up in the last few years, in part due to “the sheer number of new regulations,” and that banks “need to have clear policies and procedures” to address not just the regulations themselves but also the flow of changes in regulations. OCC Deputy Comptroller for Compliance Grovetta Gardineer echoed Belsky’s comments and added that the OCC also monitors how banks handle changes in their markets, products, and overall risk profile. Regulators also said they are looking closely at vendor risk management, from due diligence prior to selection, to ongoing monitoring of the relationship. Are your change management and third party vendor management policies, procedures, and practices ready for regulatory scrutiny? Let our experienced former, Federal regulators review them to ensure that they are ready for your next Compliance Examination.
3. During the ABA Regulatory Compliance Conference held in Washington, DC during the week of June 15, regulators noted that they are seeing increased fair lending risk in small-dollar loan products that allow significant discretion in pricing and underwriting. “One of the things we’re seeing at smaller banks that’s worth talking about is small-dollar loan products that are unsecured,” said the Fed’s Eric Belsky, Director of Consumer and Community Affairs at the Federal Reserve. “We’re seeing some situations where a considerable amount of discretion is left up to an underwriter.” Belsky recommended that banks offering these products should have policies and practices in place to document exceptions. “If you’re doing this, make sure you have a process in place for explaining that there are going to be these exercises in discretion,” he said. “You can manage the risk through clarity about why a decision was made.” He added that the agencies do not want to discourage banks from offering small-dollar loans. “The products that especially benefit our community (that) banks offer in a lot of these different areas are really great products for their customers,” he said. “We just want to make sure that you’re not going to run afoul of fair lending laws.” We have an experienced staff of former, Federal regulators who specialize in fair lending and can review your underwriting policies and procedures to afford you some peace of mind towards your next Regulatory visit.
4. The Supreme Court on Thursday June 25, 2015 upheld the use of “disparate impact” in a Texas case alleging housing-related discrimination. The high court ruled 5-4 that disparate impact, which says lenders and other defendants can be found liable for racial discrimination even if it was unintended, is recognized under the Fair Housing Act. Let our experienced, former, Federal regulators review your lending policies, procedures, and practices for any unintended disparate impact effects on a prohibited basis.
