ShareFi is here to protect you and your customers
By Jeffery Schmid
This year, banks experienced the return of onsite examinations by their primary regulators and several faced challenges as they navigated through the regulatory process. For some, it was a matter of dealing with a new emphasis on old regulations, under-experienced compliance officers or internal auditors, or simply not having well-documented or implemented processes to mitigate consumer harm or financial risk.
Some banks across the state have found themselves in violation of Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) by not properly disclosing how and when fees would be collected each time a return time is presented for payment. To this day, there is substantial emphasis by the three agencies on how the bank handles this practice and the steps they take to mitigate future infractions. In almost all cases, refunds were necessary, putting the bank reputation at risk.
We have also learned the impact of cross-collateralization when it applies to Home Mortgage Disclosure Act and complying with Flood Disaster Protection Act. While these regulations are not new and cross-collateral has been around for a long time, new emphasis has put banks at higher regulatory and financial risk considering the civil money penalties that could be assessed.
In 2023, we also saw the final implementation of Current Expected Credit Losses (CECL) and the migration from LIBOR as an approved index for various adjustable-rate loans. While banks were provided ample implementation time for this new guidance, they are now learning through examinations if their efforts were sufficient, accurate, and appropriate. If not, that may become an issue down the road.
Increased asset growth since their last Community Reinvestment Act (CRA) exam has propelled several banks into the Intermediate Small Bank (ISB) category in which Community Development loans, investments, and service are now playing a major factor in their overall CRA rating. Without early planning, tracking, and reporting, these banks have found themselves scrambling to tell their CRA story.
While I could go on with a list of complex observations from recent examinations, the real problem is how banks are able to keep up with and stay ahead of the risks that are inherent to our industry, including Bank Secrecy Act (BSA), internal controls, and loan review. These answers can be found through the various support and risk-based services offered through ShareFI services of FIPCO.
Recently, I was asked by a local banker, “What does ShareFI do?” I simply replied, “We solve problems.” If you are interested in learning more about recent trends in bank examinations or looking for further assistance with your exam experience, please contact me at jschmid@fipco.com or call me at 608-441-1220. Really, it’s no problem.
Schmid is director – compliance and management services at FIPCO, a WBA Gold Associate Member.