6 Regulator Priorities That Should Impact Your 2015 Focus
Regulators have highlighted these six key areas of compliance focus for 2015, including the TILA-RESPA Integrated Disclosure Rules and interest rate risk exposure. Prioritize these risks as you prepare for compliance success this year.
The regulators tend to have varying levels of transparency when it comes to their supervisory priorities and areas of risk focus. While the regulators tend to have different slightly different approaches, you can argue that they do tend to have similar areas of focus.
The NCUA's Supervisory Focus report does a great job of summarizing the key focal points for the regulators. While the NCUA works exclusively on compliance for credit unions, other regulatory agencies have also expressed these priorities.
Here are the top 6 regulatory priorities for 2015, according the NCUA and echoed by other regulatory agencies:
- Bank Secrecy Act: BSA compliance and the services provided to money service business continue to be a regulatory priority. The OCC also covered BSA/AML compliance in their Semiannual Risk Perspective.
- Lending Programs: Financial institutions that are offering new loan products and services must perform adequate due diligence and monitoring to effectively manage risk. As your institution changes, so does your risk - make sure that you have an up-to-date risk assessment and risk management program.
- Ability-to-Repay and Qualified Mortgage Standards Rule: It has been a year since the launch of the CFPB’s mortgage rules that included eight underwriting requirements for lenders to assess a borrower’s ability to repay a loan. Make sure that your institution is compliant with this rule.
- TILA-RESPA Integrated Disclosure Rule: August 1st is quickly approaching, and with it, the new TILA-RESPA Inegrated Disclosure rule. The rule states that loan originators must provide consumers:
- A Loan Estimate form that combines TILA disclose and the Good Faith Estimate, and
- A Closing Disclosure form which combines the final TILA disclosure and HUD-1 Settlement Statement. After the rule goes into effect, the regulators will want to see compliance.
- Cyber Security: Regulators are focusing on internal and external cyber-security risks, including the capacity to protect, recover and resume operations. The FFIEC has found that many financial institutions are not taking basic cybersecurity precautions.
- Interest Rate Risk: Exposure is a concern for all federal financial institution regulators. The OCC mentioned interest rate risk in their Semiannual Risk Perspective, and the FDIC has been very focused on it as well. Regulators recommend assessing the exposure of interest rate risk regularly.
In the OCC's most recent Semiannual Risk Perspective, they also mention Fair Lending, cybersecurity and technology risk, expansion of product lines concerns, erosion of underwriting standards, third-party oversight, ensuring effective and appropriate compliance management systems and staffing.
The CFPB has echoed many of these same issues, while also highlighting HMDA accuracy, loan servicing, debt collection, loss mitigation, consumer reporting in relation to the Fair Credit Reporting Act.
TRUPOINT Viewpoint: 2015 promises to be a busy year. More mergers? New regulations? Rates rising? Regardless, the regulator priorities should help shape your financial institution's priorities.
Every financial institution is unique; therefore, your areas of focus should be based on your unique business operations, including the size and complexity of activities. You should also be aware of where the regulators say they plan to focus.
The best way to get control is through risk assessments. A risk assessment will help you focus on the primary risks and determine where a additional controls are needed.
- Supervisory Focus for NCUA
- CFPB Supervisory Highlights: Fall 2014
- OCC Semi-Annual Risk Perspective
- FDIC Supervisory Insights, Winter 2014
- FFIEC Cyber Security
- NCUA Interest Rate Risk Resources
- CFPB TILA-RESPA Integrated Disclosure Rule