FFIEC Issues Final Revisions to Consumer Compliance Rating System
November 8, 2016, the Federal Financial Institutions Examination Council (FFIEC) issued Financial Institution Letter FIL-75-2016, Final Guidance on the Uniform Interagency Consumer Compliance Rating System. The letter announces the issuance of final revisions to the Uniform Interagency Consumer Compliance Rating System (CC Rating System). The changes were made to reflect the regulatory, supervisory, technological, and market changes that occurred in the years since the system was established.
The revisions are designed to more fully align the rating system with the FFIEC Agencies’ current risk-based, tailored examination approaches. The revisions were not developed to set new or higher supervisory expectations for financial institutions and their adoption will represent no additional regulatory burden.
Statement of Applicability to Institutions with Total Assets under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised financial institutions.
The final CC Rating System is composed of guidance and definitions. The guidance provides examiners with direction on how to use the definitions when assigning a consumer compliance rating to an institution. The definitions consist of qualitative descriptions for each rating category.
The final CC Rating System includes three categories of assessment factors:
- Board and Management Oversight
- Compliance Program
- Violations of Law and Consumer Harm
The final CC Rating System is based upon a numeric scale of 1 through 5 in increasing order of supervisory concern. Ratings of “1” or “2” represent satisfactory or better performance. Ratings of “3,” “4,” or “5” indicate performance that is less than satisfactory.
The CC Rating System is “risk-based” to recognize and communicate clearly that compliance management programs vary based on the size, complexity, and risk profile of supervised institutions.
The CC Ratings System Guidance is effective on March 31, 2017.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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