We Told You So...Did You Listen? CompliancePro is STILL the ANSWER!

Last year American Bank Systems SOUNDED THE ALARM to thrifts formerly regulated by the OTS that trials lay ahead with future oversight by the OCC. Our solution then...CompliancePro...Our solution today, STILL CompliancePro.  The consequences of inaction by some institutions can be seen in the recent NY TIMES article.  Our blog entry from June 2011 is still valid today.  Let American Bank Systems help you avoid the trials of institutions like those in the article that are running for the hills, or on their way to failure.

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Thursday, June 23, 2011

From the OTS to the OCC - Are You Ready?

From the OTS to the OCC - Are You Ready?

With CompliancePro^® from American Bank Systems Your Answer is YES!

As a result of the Dodd-Frank Act, which became law in 2010, all OTS thrift institutions will come under the oversight of the OCC on July 21, 2011. You may be unclear as to some of the differences between these two regulators. Below are some of the questions you should be asking yourself to assess your state of preparedness for this change, along with answers that we believe you should consider.

 

Should we expect a higher level of scrutiny according to OCC examination philosophy?

Maintaining satisfactory or better compliance examination ratings is essential to financial institution stability, especially in our current and expanding regulatory culture. The OCC has a reputation of being more assertive and intense than the OTS. They place a lot of weight on the institution’s internal compliance audits with emphasis also on written policies and procedures, and training. Comparatively, the OCC performs very little transactional testing, especially if they have confidence in the institution’s compliance risk management system and controls. Whereas the OTS may look at thirty loans during an examination, the OCC may look at as few as five. However, if deficiencies are discovered, the OCC will typically provide lower examination ratings. CompliancePro® is a time tested and proven tool to strengthen regulatory compliance programs, and ready financial institutions for examination preparedness.

 

Are we prepared to meet the OCC’s supervisory expectations for compliance risk management?

The OCC employs a risk-based supervisory philosophy focused on evaluating risk, identifying material and emerging problems, and ensuring that individual institutions take corrective action before problems compromise their safety and soundness. Institutions are expected to have a compliance risk management system which assesses risk by products/services offered and which monitors and manages compliance risk by performing regular monitoring between examinations. CompliancePro® can help you meet these expectations with its risk assessment and monitoring and issue management capabilities which provide for regular and consistent review and testing for all consumer regulated activity across lines of business, bank products and regulation.

 

Will our risk assessment process meet the standards of the OCC?

Simply speaking, the OCC’s focus on risk management is huge. This is their starting point for examinations. Whatever policies, procedures, training, or controls you have in place; it has to follow the risk assessment. While regulatory consumer compliance risk processes in large institutions are relatively well established, some small and medium sized institutions may need to improve upon their risk assessments to satisfy the OCC. If your current risk process is informal, rudimentary and undocumented, the CompliancePro® Risk Module is what you need to prepare a sound risk assessment process with our Inherent Risk and Risk Mitigation Analysis functionality, reporting and dashboard capability.

Email us at: espringer@abs-ok.com or call at 405-607-7000.

“SAME OLD, SAME OLD” SAYS OCC TO OTS THRIFTS…OR NOT

The OCC Senior Deputy Comptroller Jennifer Kelly, in a recent interview with the ABA, offered the following comments concerning the on-going integration of the OTS into the OCC that warrant further comment.

“We also conducted a series of examinations at both national banks and federal savings associations that were staffed with a combination of examiners from the two agencies earlier this year to help us prepare for the integration.”

According to unofficial reports, this joint endeavor resulted in significant differences in what ratings were to be issued for the institutions examined.  Typically where the OCC examiners opinions were consulted, the suggested ratings for an OTS institution were lower than those where OTS personnel had the final say.  This is to be expected as the OCC has an approach that is less tolerant of component deficiencies in compliance, as opposed to the OTS emphasis on overall and comprehensive conformity to the regulations.  Seeing the forest for the trees approach…or not.

“We do not anticipate any changes in the compliance examination experience for our community banks. As discussed in our thrift outreach sessions and similar to OTS, the OCC integrates consumer compliance work into the safety and soundness examination and issues a single report of examination.”

The changes will be anything but ordinary.  Specifically for small and medium-size institutions as concerning the Risk Assessment process, the changes will be huge.  Moreover, the Consumer Compliance portion of an examination can no longer rest upon it’s isolated standing but will now be mingled with the Safety and Soundness exam, being bruised collectively by the deficiencies in capital and credit standards greatly increased by our current declining economic conditions.  Single report examination thriving like a family who all eat dinner together…or not.

“The Portfolio Manager (PM) for a bank is the examiner who is assigned primary responsibility for the ongoing supervision of that institution… Between exams, the PM monitors performance trends and tracks progress on any Matters Requiring Attention and compliance with outstanding enforcement actions. The PM will touch base with bank management at least quarterly and is the “go-to” person for any questions that a banker or director has between examinations.”

“Ongoing Supervision” takes on new meaning for former OTS institutions.  For those Compliance departments used to an annual or even 18 month examination cycle with little to no examiner contact in the interim, those were the good old days.  Expect quarterly communication with the OCC, the absence of outstanding report issues notwithstanding.  Rather than the OCC Portfolio Manager (PM) being the “go-to” person for interim questions, rest assured the PM will be your “hide-from” person as they investigate and solicit from management what new problems are developing for OCC focus and attention.  Moreover, have a vacant office available for occupancy by an OCC representative who may become your onsite neighbor year-round.  Donuts optional.

From the OTS to the OCC - Are You Ready?

From the OTS to the OCC - Are You Ready?

With CompliancePro^® from American Bank Systems Your Answer is YES!

As a result of the Dodd-Frank Act, which became law in 2010, all OTS thrift institutions will come under the oversight of the OCC on July 21, 2011. You may be unclear as to some of the differences between these two regulators. Below are some of the questions you should be asking yourself to assess your state of preparedness for this change, along with answers that we believe you should consider.

Should we expect a higher level of scrutiny according to OCC examination philosophy?

Maintaining satisfactory or better compliance examination ratings is essential to financial institution stability, especially in our current and expanding regulatory culture. The OCC has a reputation of being more assertive and intense than the OTS. They place a lot of weight on the institution’s internal compliance audits with emphasis also on written policies and procedures, and training. Comparatively, the OCC performs very little transactional testing, especially if they have confidence in the institution’s compliance risk management system and controls. Whereas the OTS may look at thirty loans during an examination, the OCC may look at as few as five. However, if deficiencies are discovered, the OCC will typically provide lower examination ratings. CompliancePro® is a time tested and proven tool to strengthen regulatory compliance programs, and ready financial institutions for examination preparedness.

Are we prepared to meet the OCC’s supervisory expectations for compliance risk management?

The OCC employs a risk-based supervisory philosophy focused on evaluating risk, identifying material and emerging problems, and ensuring that individual institutions take corrective action before problems compromise their safety and soundness. Institutions are expected to have a compliance risk management system which assesses risk by products/services offered and which monitors and manages compliance risk by performing regular monitoring between examinations. CompliancePro® can help you meet these expectations with its risk assessment and monitoring and issue management capabilities which provide for regular and consistent review and testing for all consumer regulated activity across lines of business, bank products and regulation.

Will our risk assessment process meet the standards of the OCC?

Simply speaking, the OCC’s focus on risk management is huge. This is their starting point for examinations. Whatever policies, procedures, training, or controls you have in place; it has to follow the risk assessment. While regulatory consumer compliance risk processes in large institutions are relatively well established, some small and medium sized institutions may need to improve upon their risk assessments to satisfy the OCC. If your current risk process is informal, rudimentary and undocumented, the CompliancePro® Risk Module is what you need to prepare a sound risk assessment process with our Inherent Risk and Risk Mitigation Analysis functionality, reporting and dashboard capability.