July 25, 2016 1:36 pm

By Elva Coffey-Sears

Although not a regulatory change, per se, the FFIEC’s recent proposal to revise the Uniform Interagency Compliance Rating System may have a significant impact on banks. The revision is designed to “better reflect current consumer compliance supervisory approaches,” “more fully align the rating system with the FFIEC Agencies’ current, risk-based, tailored examination approaches” and “promote coordination, communication, and consistency among the Agencies.” The proposal further states that the revisions are not intended to “set new or higher supervisory expectations” or impose “additional regulatory burden.” A review of the comments submitted indicate general support of the proposal, but also express concern that, as written, the new rating system may not achieve the stated goals and objectives.

The proposal retains the 1 through 5 numeric rating scale and adds the following assessment categories:

  • Board and Management Oversight
    • Oversight and Commitment
    • Change Management
    • Comprehension, Identification and Management of Risk
    • Corrective Action and Self-Identification
  • Compliance Program
    • Policies and Procedures
    • Training
    • Monitoring and/or Audit
    • Consumer Complaint Response
  • Violations of Law and Consumer Harm
    • Root Cause
    • Severity
    • Duration
    • Pervasiveness

Rating definitions for each rating (1 through 5) within these categories and subcategories are also included within the proposal.

Importantly, the proposal reiterates that Compliance Management Systems (CMS) “vary based on the size, complexity, and risk profile of supervised institutions” and that examiners should consider these differences in their evaluations.

The proposal and comments are available for review at https://www.regulations.gov/searchResults?rpp=25&so=DESC&sb=postedDate&po=0&dktid=FFIEC-2016-0001

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