It has been several months, but I wanted to bring this back to the top of your mind. I just spoke with a Banker at a too-big-to-fail bank, and they are still getting pushed to reach goals. So the community bank must make sure we do not make the same mistakes. Now would be a good time to look at the CFPB’s Expectations for sales programs.
On November 28, 2016 the Consumer Finance Protection Bureau (CFPB) issued a bulletin warning supervised financial companies that creating incentives for employees and service providers to meet sales and other business goals can lead to consumer harm if not properly managed. The CFPB does not mention Wells Fargo, but we all know that their issues are why they were prompted to release the bulletin. It does not create any new regulations, but does give “The CFPB’s Expectations” for institutions that choose to utilize incentives.
The CFPB expects the institution’s compliance management program to include the following components:
- Board of Directors and management oversight;
- Compliance program, which includes:
- Policies and procedures;
- Training; and
- Monitoring and corrective action;
- Consumer complaint management program; and
- Independent compliance audit.
The CFPB writes, “To limit incentives from leading to violations of law, supervised entities should take steps to ensure their CMS is effective”. The regulatory agencies have not followed up with their own guidance or expectations, but if your institution has a cross sell or incentive program for your employees, I would familiarize yourself with these expectations and move towards incorporating them in your systems.
If you would like to discuss further what is expected, or would like someone to review your incentive program, ABS is here for you.
To read the entire Bulletin you can find it at: