New Uniform Interagency Consumer Compliance Rating System
AML AND COMPLIANCE NEWS |
The Federal Financial Institutions Examination Council (FFIEC) announced an updated Uniform Interagency Consumer Compliance Rating System (CC Rating System). The members of the FFIEC and entities covered by this final guidance are: the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration(NUCA), the Office of the Comptroller of the Currency and the State Liaison Committee (collectively, the Agencies).
The original rating system was established in 1980. These updates reflect the current regulatory, examination, technological and market environment. They are designed to reflect the current consumer compliance supervisory approaches used and to align the CC Rating System with the Agencies’ current risk-based, tailored exam process, rather than the transaction testing focused exam process in place when the CC Rating System was originally established. They do not set new or higher supervisory expectations or create any additional regulatory burden for financial institutions.
The updated CC Rating System:
- Stresses the importance of each institution’s compliance management system in relation to the size, complexity and risk profile of the institution
- Reflects the current consumer compliance supervisory approach, aligns the ratings with the current exam process and promotes consistency among the agencies
- Emphasizes compliance risk management practices that are designed to manage consumer compliance risk, support compliance and prevent consumer harm
- Considers compliance strategies that prevent, self-identify and address compliance issues proactively to be a positive thing
- Continues to be based on a scale of 1 to 5
The NCUA will continue to incorporate the revised CC Rating System into its risk-focused exam program. NCUA examiners will use the principles and standards in the revised rating system to assess a credit union’s ability to manage its compliance risk, and will reflect that ability in the Management component rating and the overall CAMEL rating used by the NCUA.
The FFIEC is recommending the Agencies implement the revised CC Rating System for consumer compliance exams that begin on or after March 31, 2017. Implementation dates may vary, however, for institutions with continuous targeted supervisory activities.