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1 Navigating the Consumer Financial Protection Bureau kpmg.com

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3 Contents 01 CFPB examination and enforcement Are you prepared? 02 Everything you need to know about the CFPB 03 Helping your business navigate the nuances of the CFPB 04 Responding to CFPB investigative demands 05 KPMG Risk Consulting: Managing CFPB regulations from start to finish

4 CFPB: Key regulatory areas The Consumer Financial Protection Bureau s (CFPB or the Bureau) Supervision and Examination Program ensures that supervised financial institutions comply with federal consumer-financial laws and protect consumers. The program also shifts the traditional examiner focus from evaluating whether an entity is in compliance to whether and how it assesses and mitigates consumer protection risk. Consumer complaints feature prominently in the supervisory and examination process. CFPB exams focus on: Risk assessments Compliance management systems Consumer complaint resolution processes CFPB s key areas of regulatory interest: Relationships with and oversight of affiliates, third-party service providers and vendors Privacy protections for information sharing Accuracy of transactions processing (e.g., truth-in-lending) Accuracy of information reporting (e.g., fair credit reporting) Unfair, deceptive or abusive acts or practices (UDAAP) Protections for specific consumer groups (e.g., service members and seniors) Consumer complaints Consumer products and services of primary interest: Mortgage lending and servicing Private student lending and student loan servicing Short-term, small-dollar (payday) lending Credit card products Prepaid card products

5 Navigating the Consumer Financial Protection Bureau 1 01 CFPB examination and enforcement Are you prepared? KPMG s Risk Consulting services The CFPB, in conjunction with other federal and state banking regulators, has intensified its examination and enforcement actions of providers of consumer financial products and services. The Bureau strives to ensure that providers do not engage in UDAAP pursuant to the guidelines of the Dodd-Frank Act 1 or otherwise cause financial harm to consumers. In 2012, the Bureau announced more than $500 million in UDAAP-related enforcement actions against financial services providers and their third-party vendors. The Bureau has taken additional public enforcement measures as it continues to protect consumers through rule-makings and enforcement actions across consumer financial products and services. Importantly, the CFPB s scope of authority reaches bank and nonbank providers, greatly expanding federal oversight of compliance with federal consumer financial laws and protection of consumers. 1 Dodd-Frank Wall Street Reform and Consumer Protection Act of Pub.L Signed July 21, 2010.

6 CFPB authorities The Dodd-Frank Act 2 addresses weaknesses in the financial markets exposed by the global financial crisis of 2007 and It established the CFPB to regulate the offering and provision of consumer financial products or services under the federal consumer financial laws 3 and to make the markets for those products and services work for consumers. The CFPB must ensure that all consumers have access to markets for consumer financial products and services [that] are fair, transparent, and competitive. 4 The Dodd-Frank Act gives the CFPB the authority to supervise traditional depository institutions banks, thrifts, and credit unions (hereafter: banks ) with more than $10 billion in assets and the affiliates of those banks, as well as certain nondepository consumer financial services companies (nonbanks) that offer consumer financial products and services. (NOTE: Hereafter, banks and nonbanks collectively will be referred to as financial institutions. ) The CFPB has the authority to supervise certain nonbanks regardless of their size, as well as certain other larger participants of consumer financial markets. In addition, the CFPB has the authority to supervise any nonbank not under its supervisory authority when it has reasonable cause, based on consumer complaints or information from other sources, to determine that nonbank is engaging, or has engaged, in conduct that poses consumer risk.

7 Navigating the Consumer Financial Protection Bureau 3 02 Everything you need to know about the CFPB Nonbanks supervised by the CFPB All, regardless of size: Mortgage companies (originators, brokers, and servicers including loan modification or foreclosure relief services) Payday lenders Private education lenders Larger participants of consumer markets identified and defined by the CFPB: Credit rating agencies (receiving more than $7 million in annual receipts from credit report activities) Debt collectors (receiving more than $10 million in annual receipts from debt collection activities) Student loan servicers (proposed servicers of federal and private student loans with more than 1 million student borrower accounts) 5 The CFPB also has shown interest in or has otherwise identified as potential larger participants markets: Credit card companies Leasing companies Certain auto financiers Tax refund anticipation loan providers Money transmitters Check cashers Prepaid card companies Debt relief service companies Banks with total assets of $10 billion or less remain subject to the supervisory oversight of their primary federal banking agencies (Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration) for purposes of compliance with the federal consumer financial laws. However, the CFPB has rule-writing authority for these laws as they apply to all providers of consumer financial products and services. It also has backup enforcement authorities for entities supervised by the federal banking agencies. Further, the CFPB frequently works with federal banking agencies, and new CFPB standards and best practices are likely to be adopted by federal banking regulators and ultimately impact smaller banks regardless of their size or primary regulator. Executive management and boards of directors should therefore stay informed of CFPB developments. 2 Section 1011 of the Dodd-Frank Act. 3 Section 1002 of the Dodd-Frank Act. 4 See Overview p.1, 5 Proposed rule released March 14, Federal Register.

8 4 Navigating the Consumer Financial Protection Bureau Supervision and examination The CFPB will monitor and examine supervised entities operations and markets for compliance with federal consumer financial laws and their implementing regulations. They will also examine risks to consumers in key regulatory areas. All CFPB-supervised financial institutions that offer consumer financial products or services will be held to the same standards and supervised using the same procedures when possible. The Bureau has acknowledged that large, complex entities have different compliance oversight and management systems than smaller entities or those offering fewer products or services. Monitoring and examination will include questioning, data collection from transaction records, and observation of operations to assess (1) institutional compliance with applicable law, and (2) the quality of the internal processes for ensuring compliance with federal consumer financial laws and promoting consumer protection. Challenges for financial institutions include noncompliance risks that derive from unique proprietary processes, the scope of CFPB responsibilities (such as information requests and consumer complaint processing), an evolving CFPB examination manual, and penalties for noncompliance. Consequences of noncompliance Under Section 1055 of the Dodd-Frank Act, financial institutions that do not comply with the federal consumer financial laws and their implementing regulations will be subject to civil actions or administrative enforcement proceedings. Penalties include: Rescission or reformation of contracts Refunds of money or return of real property Restitution Disgorgement or compensation for unjust enrichment Payment of damages or other monetary relief Public notification regarding the violation, including the costs of notification Limits on the activities or functions of the person Civil money penalties. Violators who knowingly break federal consumer finance laws are subject to fines ranging from $5,000 for first-tier violations to $1 million per day for third-tier violations. Penalties vary based on the gravity of the violation, the severity of the loss to the consumer(s), the organization s financial resources, and history of previous violations, among other criteria. Impact of consumer complaints Since its inception in July 2011, the CFPB has focused on mitigating consumer risk and enhancing consumer protection. The Bureau has used consumer complaints to better understand risks in the consumer marketplace and drive its regulatory investigations and exams. The CFPB began accepting consumer complaints related to credit card products in July 2011, followed by mortgages in December A variety of consumer products and services were added to the complaints portal throughout 2012 and In fiscal year 2012, 6 the CFPB received more than 74,000 complaints about financial products, 7 including mortgages, credit cards, bank accounts, auto loans, student loans, and other consumer loans. The CFPB also accepts complaints related to credit reporting and money transfers through the complaint portal, as well as comments on all consumer experiences through its Tell Your Story Web page. 6 October 1, 2011 to September 30, CFPB Fiscal Year 2012 Annual Report to Congress.

9 Navigating the Consumer Financial Protection Bureau 5 Professional assistance Financial services entities that want to efficiently navigate the CFPB s oversight process need a professional services firm to help evaluate compliance with the federal consumer financial laws, assess potential risks for consumer harm inherent in product and service offerings, prepare for examinations, assist with targeted reviews, respond to potential enforcement actions, and mitigate process challenges. Such a firm can also assist companies seeking to assess specific processes, such as vendor management (including compliance and oversight), analyses of complaint intake and resolution, and fraud and misconduct control. The introduction of the CFPB has ushered in a new consumer-oriented focus that requires an evaluation of business strategies, product offerings, and organizational structures.

10 Financial institutions face new challenges from the CFPB s mandate to ensure that supervised institutions are complying with federal consumer-financial laws and are protecting consumers from financial harm. Currently, the Bureau has established multiple examination modules to ensure that financial institutions meet CFPB objectives. These modules are organized into three main sections covering the Compliance Management System, Product-Based Procedures, and Statutory- and Regulation-Based Procedures. KPMG can help clients meet these regulatory expectations.

11 Navigating the Consumer Financial Protection Bureau 7 03 Helping your business navigate the nuances of the CFPB Compliance management system The CFPB expects every regulated entity under its supervision and enforcement authority to have an effective compliance management system (CMS) adapted to its business strategy and operations. Each CFPB examination will include review and testing of components of the supervised entity s CMS, and each provider is expected to address and prevent violations of law and associated harms to consumers through its compliance management process. The common control elements of an effective CMS are: Board of directors and management oversight The compliance program (policies and procedures, training, monitoring and corrective action) Response to consumer complaints Audit coverage of compliance matters (i.e., testing and reporting). Examination objectives To assess whether the board of directors and management have developed and communicated clear expectations regarding compliance throughout the financial institutions and to its third-party vendors and service providers To test that the financial institution is in compliance with federal consumer financial laws, and that testing is communicated to the board of directors and management To assess whether the institution has an effective compliance program that is consistent with policies approved by the board of directors To test and assess whether the financial institution s consumer complaint processes are (1) responsive to consumers, (2) properly escalated if potential legal issues are related to consumer harm (e.g., UDAAP), and (3) result in corrective actions

12 8 Navigating the Consumer Financial Protection Bureau How KPMG can assist with CMSs KPMG is well versed in what constitutes a strong compliance program. We have in depth experience with: Assessing and developing CMSs, including roles and responsibilities aligned to the three lines of defense (business operations, risk management, and internal audit) Alignment of strategies to key risk and performance indicators Developing a risk-based approach to testing, vendor management, and reporting Proactively or reactively addressing a client s CFPB concerns during the course of an annual and objective compliance review or in response to more targeted regulatory inquiries, reviews, and enforcement actions Reviewing, enhancing, and implementing regulatory compliance change management procedures, including mapping regulatory requirements to business units, processes, controls, vendors, and auditable entities Testing exercises, gap and impact assessments of new regulations, and development of change management processes Evaluating third-party vendor and service provider management and oversight, including compliance and complaint processes Conducting readiness reviews in anticipation of first examinations, including development of gap assessment and action plans Product-based procedures The product-based procedures in the CFPB s Supervision and Examination Manual generally outline risks and supervisory considerations related to the specific product or service, as they relate to the relevant statutes and implementing regulations (see Statutory- and Regulation-Based Procedures page 10). Most nonbank providers of consumer financial products and services had not been subject to federal regulatory oversight until the CFPB. Nonbanks are subject to individual examinations, and CFPB examiners will be trained in both bank and nonbank supervision to: Review a nonbank s consumer financial products and services with a focus on risk to consumers Assess the nonbank s compliance with federal consumer financial laws for the entire life cycle of the product or service Conduct interviews with personnel and observe the nonbank s operations Seek corrective and legal actions to federal consumer financial law violations The Product-based procedures currently address: Consumer reporting (larger participants) Mortgage origination Mortgage servicing Short-term, small-dollar lending (payday lending) Debt collection (larger participants) Education loans

13 Navigating the Consumer Financial Protection Bureau 9 Examination objectives To assess the quality of the regulated entity s CMSs To identify acts or practices that materially increase the risk of violations of federal consumer financial laws To gather facts that help determine whether a regulated entity engages in acts or practices that violate the requirements of federal consumer financial laws To determine if a violation of federal consumer financial law has occurred and what supervisory or enforcement actions are appropriate To understand the role and oversight of third parties in providing and delivering products to consumers How KPMG can assist with product-based procedures KPMG can help banks and nonbanks prepare for and respond to CFPB inquiries, examinations, and enforcement actions, such as: Conducting thorough product reviews to assess individual products from the perspective of UDAAP and other fairness requirements Developing and assessing fair lending data, models, and analytics Reviewing and assessing new products during their development, including associated marketing programs Testing and enhancing policies and procedures to obtain compliance with relevant federal consumer financial laws Evaluating and testing compliance with internal policies, procedures, and controls Testing, on a large scale and at a granular level, to identify specific compliance (e.g., truth in lending, Real Estate Settlement Procedures Act, flood insurance, Service members Civil Relief Act, document reviews) Identifying potential gaps in compliance of target areas (e.g., servicing transfers, escrowed funds) Conducting due diligence reviews of third-party intermediaries, including reviews of contracts, policies and procedures, and compliance Implementing responses to enforcement actions, including requests for electronically stored information (ESI)

14 10 Navigating the Consumer Financial Protection Bureau Statutory- and regulation-based procedures The CFPB Supervision and Examination Manual incorporates examination procedures developed with the support of the Federal Financial Institutions Examination Council (FFIEC) for many of the federal consumer financial laws now enforced by the CFPB. It also helps CFPB examiners determine if financial institutions are complying with federal consumer financial laws, and whether their policies and procedures adequately detect, prevent, and correct practices that increase the risk of violating those laws or causing harm to SCRA consumers. Examination objectives To determine compliance with the federal consumer financial law and its implementing regulations To assess the quality of the compliance risk management systems To assess the reliability of internal controls, and policies and procedures intended to ensure compliance with federal consumer financial laws and implementing regulations To determine the accuracy and timeliness of required reporting To determine whether corrective actions are appropriate when violations of law or regulation are detected How KPMG can assist with statutory- and regulation-based procedures KPMG can assist financial institutions in preparing for inquiries, examinations, and enforcement actions initiated by the CFPB on any one or a combination of the following rules covered by the CFPB s Statutory- and Regulation-Based Procedures section of its Supervision and Examination Manual: UDAAP KPMG can help prevent, detect, and respond to activities that may indicate UDAAP. Our team works with financial institutions to help them understand how their policies, procedures, practices, and data (whether in fact or appearance) could subject them to charges of UDAAP. KPMG can assist with assessments of and enhancement to a financial institution s consumer complaint intake and resolution processes. Equal Credit Opportunity Act (ECOA) and Regulation B KPMG combines extensive knowledge of compliance requirements, credit insight, and statistical tools to conduct analyses of consistency in decision making and equal treatment in credit underwriting, and equal treatment in loan servicing/modification in multiple consumer lending segments (mortgage, auto, small business loans, student loans, and credit cards). KPMG can assist with a voluntary self-test of Regulation B, as well as assist with subsequent corrective actions that may be needed to address compliance deficiencies. We also have conducted both decision and disparate impact testing, and have the investigative capabilities to research and respond to anomalous data analytics results and allegations regarding unfair or abusive fair lending practices. KPMG s regulatory compliance specialists are well versed in applicable requirements pertaining to policies, procedures, records retention, and training.

15 Navigating the Consumer Financial Protection Bureau 11 Home Mortgage Disclosure Act (HMDA) and Regulation C KPMG regulatory subject matter professionals can help banks and other mortgage lenders analyze data related to home purchase loans, home improvement loans, and refinancings, and recommend corrective actions for potential enhancements related to compliance with the HMDA and Regulation C. Our professionals also may assist in areas such as policy and procedures reviews, data validation exercises, large-scale data scrubs, records retention reviews, Community Reinvestment Act (CRA) reviews, and segregation of duties testing. Truth in Lending Act (TILA) and Regulation Z KPMG regulatory subject matter professionals can assist banks and nonbanks in a variety of areas related to TILA and Regulation Z compliance, including assessing CMSs, identifying gaps between policies and procedures and regulatory requirements, and recommending corrective actions. Specific areas of assistance might include systems updates, accuracy and timeliness of disclosures, calculations of finance charges, annual percentage rates and other fees, timely account maintenance, advertising practices and content reviews, and consumer complaint intake and resolution. KPMG can also assist with implementing new requirements generated by regulatory rulemakings and related disclosure testing. Real Estate Settlement Procedures Act (RESPA) and Regulation X KPMG professionals can identify gaps in RESPA compliance through monitoring and testing procedures, as well as conducting policies and procedures reviews, disclosures reviews, and new systems testing. KPMG can also perform targeted analytical reviews, including loan file reviews, to identify indications of practices prohibited by the RESPA including kickbacks, payment or receipt of referral fees, excessive escrow accounts, and improper treatment of accounts after servicing transfers. Homeowners Protection Act (HPA) KPMG professionals can help assess aspects of an institution s compliance program related to the HPA (also known as the PMI Cancellation Act). Our professionals can perform data analytics and review documentation to determine whether private mortgage insurance fees were appropriately canceled (in a timely fashion) and such cancellations were properly communicated to borrowers, unearned premiums were returned to borrowers, and excessive premiums were not charged to borrowers. Consumer Leasing Act (CLA) KPMG can assist with monitoring and testing of CLA compliance, as well as with designing and implementing any subsequent corrective actions needed to address compliance deficiencies. Targeted analyses may be conducted to compare borrower information and to help a client determine whether lease terms were consistently applied to all clients. Analytics also can be applied to assist with identifying whether excessive amounts were charged to borrowers for balloon payments, mileage overages, damages, or other penalties at the end of a lease term. Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) KPMG can assist financial institutions that employ mortgage loan originators (MLO) with policies, procedures, and controls to help ensure compliance with the SAFE Act, as well as dispute or investigatory work arising from allegations of regulatory noncompliance and/or abusive practices related to the SAFE Act. We can assist with the design and implementation of systems and processes to track an institution s MLO employees and monitor for renewals.

16 12 Navigating the Consumer Financial Protection Bureau Fair Credit Reporting Act (FCRA) and Regulation V KPMG can help our clients develop mechanisms to flag and resolve issues that might result in FCRA violations. For example, our professionals can conduct targeted reviews and testing of areas, including consumer complaint intake and resolution, consumer dispute investigations and resolution, timeliness and accuracy of credit bureau reporting, timeliness and accuracy of information obtained from external agencies, and calculations of risk-based pricing. Fair Debt Collection Practices Act (FDCPA) KPMG subject matter professionals can assist debt collectors in areas such as controls testing, policy and procedures reviews, and reviews of record retention practices. Moreover, KPMG can assist clients by providing investigative services to research allegations of improper debt collection practices. Such investigations may include analytics of consumer payments collected as well as electronic discovery services to help identify improper debt collection communications. KPMG may also assist clients with the development and review of scripts for compliance and also monitor and score calls to assess compliance. Further, KPMG is working with various call center technology companies to implement automated monitoring of calls. Electronic Funds Transfer Act (EFTA) and Regulation E KPMG can assist banks and nonbank financial institutions by providing relevant analyses, including monitoring and testing of policies, procedures, and controls to help address EFTA compliance in areas such as required disclosures, transaction authorizations (e.g., opt-in or opt-out), consumer liability for unauthorized EFTs, account dormancy or inactivity; service fees and expiration dates related to gift certificates or stored value cards, and fees related to overdraft services and insufficient funds. KPMG professionals can also provide dispute advisory and investigative services relating to potential EFTA violations (e.g., overdraft fee litigation) and cyber-crime (data breaches). Truth in Savings Act (TISA) and Regulation DD KPMG can assist financial institutions with assessing compliance with the TISA throughout the life cycle of savings-related products and services, including monitoring and testing of account maintenance and advertising practices. KPMG can also provide dispute advisory, data analytics, electronic discovery, and investigative services relating to potential TISA violations. Such needs may arise out of disputes involving overdraft fees, as well as interest or yield calculations. Privacy of Consumer Financial Information (PCFI) KPMG can conduct policies, procedures, and controls reviews designed to protect consumer financial information and provide recommendations to address compliance gaps. KPMG can also perform management information system assessments, including reviews of monitoring and exception reporting activities, as well as investigative, electronic discovery, and dispute advisory services related to allegations of inappropriately shared private information.

17 Navigating the Consumer Financial Protection Bureau 13 Other considerations Some statutes were not transferred to the CFPB s authority but do impact certain consumer financial products and services. These statues are not included in the examination procedures of the Supervision and Examination Manual (as discussed above), but are nonetheless areas which the CFPB considers in light of its consumer protection concerns. These statutes include, but are not limited to: The Community Reinvestment Act The Service members Civil Relief Act The Flood Insurance Act. The CFPB evaluates compliance with these statutes as part of a financial institution s relevant products and services, such as deposit accounts, and lending and servicing activities, and actively works with the federal agencies that have direct responsibility for the rules to coordinate corrective actions, as needed. KPMG can offer assistance reviewing and testing for compliance with these laws in a manner that is similar to the relevant services provided above. Similarly, the CFPB s consumer protection focus, especially with regard to UDAAP, has highlighted consumer protection concerns in consumer financial products and services not directly under the CFPB s authority, such as retail retirement savings and pension-related products. In this regard, the CFPB has expressed UDAAP and related consumer protection concerns for certain consumer groups.

18 When a company receives a Civil Investigative Demand (CID) from the CFPB, timing of the response is critical. A CID can require the production of documents, answers to interrogatories, and/or appearance for testimony. Upon receiving a CID and in preparation for the meet and confer, companies should evaluate the CID s scope and compliance requirements and reasonably estimate the time and effort that will be involved in responding/producing documents and other information. Many times the language in CID document requests can be overbroad and contain phrases such as all documents and communications related to Compliance to the letter with these requests can be extremely costly. Undertaking an analysis of the cost of compliance can be a fruitful exercise to help articulate the burden to the company. Additionally, proactive development of reasonable alternatives that address the spirit of the requests can help organizations shape their discussions with the CFPB in an effort to reach agreement on production requirements that are more targeted and specific.

19 Navigating the Consumer Financial Protection Bureau Responding to CFPB investigative demands How KPMG can assist with investigative demands KPMG advises clients on the technical components of their document production requirements. One of the most critical steps in ediscovery is identifying where potentially relevant documents may exist within the company. With so many sources of ESI today, coupled with emerging trends such as Bring Your Own Device (BYOD) and cloud, it is imperative that companies get an accurate ESI inventory to inform legal strategy and business decisions. KPMG conducts thorough interviews of company personnel (IT, custodians, etc.) to determine how employees create, organize, store, distribute, and archive documents and communications, and catalogues ESI sources that may contain responsive information. Based on information obtained from interviews and the requirements in the CID, KPMG prepares analyses of the burden associated with compliance and compiles detailed reports of projected costs and timing for document productions. Our team has been successful in helping clients articulate the overbroad nature of many requests, along with creating alternative proposals to reduce burden to the company while still providing the CFPB with information sufficient to satisfy the spirit of their requests. KPMG provides Early Case Assessment (ECA) to help develop data collection strategies, data filtering and culling strategies, data stratification and sampling, and custodian and systems based prioritization and sampling. Once data is collected and initial filters applied, KPMG prepares a repository of the documents for review, classification, and subsequent production. Our approach to ediscovery is premised on a phased methodology that seeks to reduce the volume of data at each step in the process while demonstrating soundness and defensibility. While preservation may be perceived as necessarily broad, this does not mean that everything preserved must be collected; nor does it mean that everything collected must be processed. It is likely that far fewer documents will be presented for review than in more traditional processes.

20 KPMG is a global network of professional firms providing audit, tax and advisory services. We operate in 156 countries and have more than 152,000 people working in member firms around the world. Our global strength allows us to draw on multinational teams with deep and broad financial services regulatory experience, technical skills, and industry knowledge to help our clients address regulatory concerns across a spectrum of issues, including business strategies, compliance management, consumer protection, fraud, and misconduct. In the United States, KPMG professionals are well versed in what makes a strong regulatory compliance program for financial institutions now supervised by the CFPB. We understand how to prepare for and test for compliance with the federal consumer financial laws. We can assist with efforts to test the compliance and management of financial institutions third-party vendors. As needed, we can assess efforts to prevent or remediate irregularities suggestive of noncompliance, including potential violations of UDAAP.

21 Navigating the Consumer Financial Protection Bureau KPMG s Risk Consulting services: Managing CFPB regulations from start to finish Compliance KPMG assists clients with assessing and enhancing compliance programs that govern and manage regulations, assisting with testing exercises across all three lines of defense (business operations, risk management, and internal audit), developing regulatory change management processes, performing gap and impact assessment analyses of new regulations, assisting with regulatory actions, providing subject matter and other services to all three lines of defense, conducting training programs, and fulfilling regulatory on-call services. KPMG practitioners bring industry-leading practices and understanding of regulatory expectations to engagements. Relevant experience Assisted several nonbank clients prepare for CFPB examination by conducting readiness assessments covering their CMS set up Assisted a number of clients with managing regulatory enforcement actions Helped clients establish their regulatory change management process Worked with banks and nonbanks to enhance their third-party oversight Consumer protection KPMG can help clients review their operations through a consumer protection lens, including assessing and enhancing consumer compliance initiatives, including UDAAP, enhancing vendor risk programs to include consumer protection assistance with the enhancement of enterprise-wide complaint systems, helping with testing exercises across all three lines of defense, assisting during regulatory actions including working with banks and government organizations on enforcement actions, providing subject matter and other services to all three lines of defense, and working with third-party service providers. Relevant experience Assisted with large-scale look-back engagements to identify and quantify financial harm to consumers due to regulatory actions Assisted with monitoring of compliance policies and testing of the associated controls Assisted banks in rolling out their consumer protection assessment elements of vendor management programs Fair lending Fair lending and fairness program reviews are particularly critical in today s UDAAP oriented, consumer protection-focused regulatory environment.

22 18 Navigating the Consumer Financial Protection Bureau Relevant experience Conducted proactive fair and antipredatory lending program and risk assessments Conducted a review of practices and controls, and assisted with enhancing the corporate fair lending program Redesigned and rebuilt statistical models and monitoring frameworks Assisted clients with regulatory and litigation matters Worked with client analysts to help bring analyses in-house and implement a statistical monitoring framework Disputes, investigations, and examinations KPMG helps organizations achieve the highest level of business integrity through prevention, detection, and investigation of fraud and misconduct; by avoiding and resolving disputes; and by providing dispute advisory services and support. Financial institutions are operating in a challenging environment that is inundated with data and reporting requirements; rapidly changing markets and complex financial instruments; increasingly sophisticated threats from fraud, organized crime, and terrorism; and increasingly complicated regulation and oversight. Enforcement actions and litigation can be both very public and very costly. In such enforcement actions and litigation matters, KPMG can help with assessing damages and performing valuations; resolving accounting, audit, economic, econometric, and finance-related issues; and providing expert witness services. Relevant experience Assisted a large bank in responding to a CFPB electronic discovery request related to customer disclosures created by the bank Analyzed the risk/return characteristics, investment advice, and adequacy of disclosures made by the registered investment adviser affiliate of a large regional bank to its clients regarding the marketing of investment portfolios and appropriate asset selection and asset weighting within the portfolios Analyzed millions of FX transactions and the quotes given to clients in response to allegations that a large bank, acting as an FX market maker, overpriced FX charges to certain clients and that the bank misrepresented its services in claiming that the transactions were performed at best execution Assisted an identity protection solutions company in responding to a CID from the CFPB related to deceptive marketing and sales practices by providing evidence and discovery management services, interrogatory assistance, and burden analysis which resulted in the CFPB s agreement to significantly reduce the scope and extend deadlines to comply with the CID Assisted a commercial bank with an internal investigation of the files and communications related to all of the commercial real estate loans of a major customer Assisted a global financial institution with banking subsidiaries in the United States to address potential exposure to significant loan losses from a possible fraud scheme involving commercial real estate transactions Assisted the private banking group of a regional bank to conduct an internal investigation of a suspected fraudulent investments scheme in a recently acquired investment management firm Reviewed the investigative and security programs of a large commercial bank

23 Navigating the Consumer Financial Protection Bureau 19 In a global marketplace distinguished by historic change, uncertainty, and competition, financial services organizations must overcome ongoing challenges to succeed. Hiring the right professional services firm is critical, particularly one that understands your business issues and is committed to providing the insight and perspective necessary to achieve success. We are confident that firm is KPMG. We help financial institutions succeed in this new environment. We welcome the opportunity to speak with you regarding your institution s concerns and our broad range of services related to consumer protection.

24 kpmg.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. NDPPS

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