Examiners at the Consumer Financial Protection Bureau and the OCC remain intensely focused on incentive compensation and sales practices, particularly at banks with more than $20 billion in assets, according to senior officials speaking at ABA’s Government Relations Summit this morning.
“We understand that you all need and use incentive programs to incent the kind of behaviors you want to see in your employees,” said Chris D’Angelo, the bureau’s associate director for supervision, enforcement and fair lending. He added that banks using these programs need “adequate compliance management” program to mitigate risks. “When you see failures here….you undermine the core integrity of the financial system,” he added. “We think we have a shared interest in demonstrating that these problems are not pervasive.”
Toney Bland, senior deputy comptroller for midsize and community bank supervision at the OCC, said that his agency is focusing on complaint management and reporting and on systems and programs to mitigate risks associated with sales practices and incentives, “including in the wealth management area.” D’Angelo added that banks must also consider “incentives you create for your service providers,” noting that the CFPB has seen incentive concerns with credit card add-on products and third-party debt collectors.
The American Bankers Association has produced a members-only incentive compensation and sales practices risk assessment tool to help bankers to comply with and navigate evolving regulatory expectations in this area.